The UK financial watchdog, the Financial Services Authority (FSA), has indicated that it does not want to take its battle with the five media groups involved in the Interbrew leak case back to court.

Ken Rushton, the FSA's director of listings, said at a conference attended by the editors of the five media groups concerned that, with the co-operation of the press, the agency was "hopeful it will be unnecessary to test our arguments in court". However, he did not expand on what co-operation was envisaged.

Interbrew eventually dropped its proceedings against the five groups leaving the FSA to investigate the case. It was generally viewed that the newspapers had been sent doctored documents to give the impression that Interbrew was about to launch a bid for SAB to allow the fraudsters to capitalise on share price movement.

While the FSA has strong powers to force disclosure in suspected cases of market abuse, these comments are the strongest indication so far that the agency is reluctant to use its muscle in this instance. But at the conference Rushton indicated that he believed it was part of the FSA's responsibilities to ensure that the press was not unwittingly "misused" in a share-rigging scam. He denied that this was de facto press regulation.

He said the FSA could get involved if the "the financial press is used to disseminate information that is false or misleading with the aim of moving markets." He said that the media had a "fundamental right to protect sources" but claimed this was not "an inalienable right". "We are looking to co-operate with journalists, not fight journalists," he added.

Alan Rusbridger, editor of The Guardian, one of the newspapers implicated in the Interbrew case, said he found Rushton's comments "ultimately ... quite menacing". Andrew Gowers, editor of the Financial Times, which was also one of the groups accused in the case, said there had been "very mixed messages".