Vodafone drags Footsie down

Heavyweight stock Vodafone contributed to the negative mood in London today as shares in the mobile phone giant tumbled more than 2%.

The poor performance of the City’s most traded stock combined with weak sentiment across world markets caused the FTSE 100 Index to drift back below the 4500 mark to close 33.7 points lower at 4468.5.

A lack of economic and corporate data was keeping traders away from the market, although tomorrow’s minutes from the Bank of England’s interest-rate setting meeting could give direction.

Markets are expected to remain sluggish until June 30 when the US Federal Reserve is likely to lift interest rates by 0.25% and power in Iraq will be handed to an interim government.

Banking groups were among other stocks struggling as fears over higher interest rates on both sides of the Atlantic continued to mount, with Royal Bank of Scotland off 22p to 1634p, Barclays down 5p to 483.25p and Lloyds TSB weakening 2.75p to 433.25p.

New York’s Dow Jones Industrial Average was doing little to help the mood, down more than 50 points by the close of trading in London.

In London, British Gas owner Centrica moved to the top of the risers board as investors continued to respond positively to the possible sale of motoring organisation the AA. Shares were a further 2% or 5.5p stronger at 226.75p.

Royal & Sun Alliance started losing yesterday’s gains with a 0.25p fall to 83.75p. The group is in talks to sell its life insurance business.

On the downside, Vodafone was second in the list of Footsie fallers with a decline of 2.75p to 122.75p as investors started to fret over the impact of fierce price competition.

Retailer Dixons was the heaviest faller as shareholders prepared for the company’s annual results tomorrow. The stock weakened 5.25p to 159.25p.

Oil stocks were also in the red with Shell 4.25p lower at 407.5p after it was downgraded by broker UBS. Rival BP also retreated by 3.5p to 486.75p.

Reports that the EU Commission is set to probe the allocation of landing slots at London Heathrow airport pushed down shares in British Airways by 2.25p to 260.75p.

Elsewhere, a return to profit failed to spark shares in civil engineering group WS Atkins. It fell 22.5p to 576.5p despite posting pre-tax profits of £62 million against losses of £45.3 million last time.

Dobbies Garden Centre fared better, growing 6p to 456p after reporting a strong start to the second half of its financial year. Results for the first six months showed a rise in sales of 7.5% to £23.4 million.

The biggest risers in the Footsie today were Centrica up 5.5p to 226.75p, Capita ahead 7p to 325p, Wolseley up 10p to 842p and Rolls-Royce ahead 2p to 237.5p.

The heaviest fallers were Dixons off 5.25p to 159.25p, Vodafone falling 2.75p to 122.75p, Hays off 2.75p to 124p and BT falling 4p to 192p.