Bolland, who has been CEO at Morrisons, the UK's fourth largest grocer, since 2006, will take up his new post in the New Year at a time and on terms to be confirmed, M&S said.

Morrisons said Bolland would stay with the firm until the end of January.

His appointment ends M&S' 20 month search for a new CEO to succeed Stuart Rose.

M&S had previously said it would prefer an internal candidate, with finance director Ian Dyson, food chief John Dixon and clothing boss Kate Bostock seen as the contenders. But they all failed to impress at last month's investor day, which was seen as a beauty parade for one of the biggest jobs in the industry.

"Being CEO of M&S is the job in UK retail," said one shareholder. "It's a bit like being asked to be England football manager isn't it? You don't turn it down."

Shares in M&S rose to a 17-month high and were up 5.3 percent at 387.7 pence at 12:33 p.m. Shares in Morrison's were down 4.8 percent at 281.6 pence.

Rose will continue as part-time chairman to ensure a smooth transition and as previously stated will leave M&S by July 2011.

Bolland is widely regarded as having delivered a successful turnaround at Morrisons. Previous to that job he was chief operating officer at Heineken based in the Netherlands.

His appointment to M&S was welcomed by sector analysts, but they said it was a blow to Morrisons.

"On the face of it, a very good appointment," said John Stevenson, analyst at KBC Peel Hunt.

"You could argue Marc hasn't got the public persona of, say, a Justin King (CEO of J Sainsbury ), because he's not been in the press as much. But the fact is he's been very successful at Morrisons."

Bolland, who is Dutch, will be M&S' second non-British CEO, following Belgian Luc Vandevelde, whose troubled tenure in the top job culminated in a second failed bid approach for the retailer from billionaire Philip Green in 2004 and Rose's appointment as CEO.

(Editing by Paul Sandle and Andrew Callus)