Market report: Monday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

Shares in the world's biggest mobile phone operator Vodafone tumbled below the 200p level with a fall of 6 1/2p to 198p as fears grew that its balance sheet was becoming overstretched. Dealers in the City are worried that the proposed sale of its Infostrada subsidiary to the utilities supplier Enel for e11bn (£7bn) cash is about to be blocked by Italy's anti-trust authority.

Such a move would be a severe blow to Vodafone, which would see its debt levels soar, matching other telecom companies. If the deal does fall through, it is doubtful Vodafone would find another buyer willing to pay cash for Infostrada, and brokers say it is unlikely it would get anywhere near the terms being offered by the Italians because of the downturn in sentiment.

British Telecom touched 576p before rising 10 1/2p to 610p. Broker ABN Amro describes BT as dead money because of its huge debts. BT says it may scrap plans to float off 25% of its wireless operation and instead opt for a full demerger.

Newcomer Orange also suffered, initially dropping to 559p, before recovering 4p to 565p.

Elsewhere, traders were striving to rebuild the market's shaky confidence in the wake of Friday's sell-offs for both London and New York. These were prompted by US inflation numbers that were worse than expected and which may limit the scope for further interest-rate cuts.

Prices traded in narrow limits for much of the day without any lead forthcoming from Wall Street and Nasdaq, which were both closed today for Presidents' Day. By the end of the day the FTSE 100 index had risen 5.78 points to 6094.0.

Halifax was a weak market, falling 18p to 708p ahead of full-year results tomorrow. Broker Credit Lyonnais Securities is bearish after turning a seller of the shares. It has been telling clients that income growth has probably slowed to 2% and that the proposed acquisition of troubled life assurer Equitable Life holds few attractions.

US securities house Schroder Salomon Smith Barney has also reiterated its 'underperform' on Halifax.

Bass firmed 1 1/2p to 744p despite another downgrade from Deutsche Bank.

Tesco impressed with its latest trading update, and the shares put on 7 1/2p to 268 1/2p. The supermarkets giant is confident that results for the year will top £1bn and meet City forecasts. Most brokers are looking for profits of about £1.05bn compared with the £933m achieved last time.

Boots fell 3p to 607p following reports that the chemists chain will have to write off hundreds of millions of pounds as part of an overhaul to enable it to fend off competition from the supermarkets.

Steelmaker Corus Group rose 4 1/4p to 82 3/4p, lifted by news of the proposed three-way merger announced last week by its rivals Acerinox, Usinor and Arbed.

The buyers came in for George Wimpey, up 12 1/2p at 177p, ahead of results due soon. Persimmon also stood out among house builders, with a rise of 18 1/2p to 292p on the back of a 'strong buy' recommendation from broker UBS Warburg.

• 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.

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