Market report: Wednesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

EUROPE'S biggest mobile phone operator Vodafone was on the slide despite receiving a helping hand from its joint broker UBS Warburg. Vodafone retreated 2p to 180 3/4p after going ex-dividend, but that has not dampened the enthusiasm of Warburg for the shares.

It continues to rate them a 'strong buy' and has raised its target price from 180p to 225p after publishing a 50-page report on the company for clients. It says margins have improved, capital expenditure is falling and cashflow has been growing.

Warburg says that in addition to the traditional mobile phone operation, valued at 184p, the real boost to future growth will come from the transfer of data, worth a further 33p to the price at the moment. As the impact of data applications kicks in next year, it could lead to a rerating of the shares.

More than 220m Vodafone shares changed hands but there was also further heavy turnover in mmO2. The demerged BT mobile business was 2p firmer at 85 1/2p with nearly 260m shares traded.

The rest of the equity market picked itself up from an early markdown, supported by indications of a big buy programme by one leading house. There were some major movements with AstraZeneca adding 93p at 3240p and Smith & Nephew up 29p to 368p. By contrast, British Airways dropped 18p to 201 1/2p. The FTSE 100 index rose 15.1 points to 5313.8 despite opening falls for the Dow.

P&O Princess was low in the water, sinking 21 3/4p to 347p. The luxury cruise operator on Tuesday announced details of a £4bn merger with rival Royal Caribbean. There is now talk that the biggest cruise line operator Carnival wants to scupper the deal by bidding for Norwegian-owned Royal Caribbean.

Builder Alfred McAlpine rose 12p to 405p ahead of a visit by brokers to Manchester, where they will inspect two of its sites. Earlier this year, McAlpine bought the housebuilding arm of George Wimpey, where it has since secured £350m of new orders.

The proposed strike by the Professional Footballers Association looms large but appears to be having little effect on the share prices of the quoted clubs, such as Manchester United, down 1/4p at 140 3/4p, Newcastle United, 1/2p higher at 33 1/2p, and Tottenham Hotspur, 1/2p firmer at 46p. Perhaps that is because the share prices of many clubs have already been hit hard by a disenchanted City, which is worried by the spiralling cost of players' wages.

Some brokers say the television rights bubble will burst next time it comes up for renegotiation because of the reluctance of many armchair supporters to cough up the money to watch the games.

Kingfisher rose 5 1/4p to 381 1/2p after US securities house Morgan Stanley Dean Witter rated the shares a 'buy' and raised its target price by about 40p to 435p.

Logistics specialist Hays fell 3 1/2p to 206 1/2p after broker Credit Suisse First Boston downgraded from 'buy' to 'hold'. Jarvis Hotels firmed 2p to 88 1/2p. Chairman John Jarvis has picked up 25,000 shares, stretching his holding to 3.1m or less than 1%.

Contract caterer Compass Group fell 14 1/2p to 476 1/2p, reflecting disappointing results on Tuesday from French rival Sodexho Alliance.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

Geoff Foster of the Daily Mail on yesterday's trade
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