LONDON (Reuters) — Cadbury shares dipped below Kraft Foods' £10.6 billion ($17 billion) bid price for the first time yesterday as prospects of a rival bid receded and analysts reckoned Kraft now needed only to slightly sweeten its offer to win.

Kraft, the US food group, will not have to offer much more than 800 pence a share for Cadbury, analysts said, after shares in the British confectioner hit a day's low of 766½p, compared with the current value of 771p for Kraft's cash and shares bid. Cadbury shares were back up 0.6 percent at 776p by mid-afternoon.

"We continue to believe Kraft will have to come up with a bid of over 800p for Cadbury to fold," said Investec Securities analyst Martin Deboo.

Cadbury shareholders still saw Kraft's current bid as unacceptable but were more cautious in looking for some of the heady prices of over 850p mentioned previously.

Reports of a possible counterbid from Hershey Co were largely dismissed after Cadbury said it was not looking for a white knight bidder and analysts continued to doubt how Hershey could finance a deal.

Kraft's chances of winning the game have been boosted in recent days by a rise in its own share price, which has in turn raised the value of its current cash and shares offer.

Kraft raised the cash element of its bid for Cadbury on Tuesday without changing the price by making a corresponding cut in the paper element, but within hours Kraft's largest investor Warren Buffett warned the US group not to overpay and issue a large number of new Kraft shares..

Kraft shares have been boosted by Buffett's warning on overpaying and on the prospects that the deal could actually fail. They closed on Wednesday at $28.97, above the $28.10 they fetched just before the bid was announced in early September.

Kraft CEO Irene Rosenfeld has taken a hard-noised approach to Cadbury, refusing to increase the bid.