Vodafone buoys up FTSE

The FTSE 100 Index went into reverse today after heavy falls for tobacco and pub stocks offset a strong performance by market heavyweight Vodafone.

The FTSE 100 Index went into reverse today after heavy falls for tobacco and pub stocks offset a strong performance by market heavyweight Vodafone.

Forecasts of profit-taking by US investors later today added to the negative sentiment as the Footsie lost hold of a modest gain in the first hour of business to stand 24.3 points lower at 4778.8 by mid-morning.

The weakness came despite a jump of 1% for Vodafone – up 1.25p to 144p – as investors cheered healthy half-year results and a doubling of the dividend.

With Vodafone holding a sizeable chunk of the stock market’s value, the blue-chip giant was responsible for keeping the Footsie’s losses in check.

Tobacco stocks led the retreat as the British government prepared to announce a ban on smoking in all workplaces and anywhere serving food.

Gallaher bore the brunt, falling almost 3% or 18.5p to 699p, while Imperial Tobacco eased 21p to 1301p and British American Tobacco slipped 4.5p to 861p.

Pub companies were also affected with Enterprise Inns topping the Footsie fallers board with a decline of 23p to 598.5p, a drop of almost 4%. Among FTSE 250 Index companies, Punch Taverns slumped 13.25p to 546.75p, Mitchells & Butlers eased 10.5p to 281.5p and JD Wetherspoon fell 5.25p to 227.25p.

There was also weakness in the retail sector after French Connection warned that its profits would be significantly below expectations. The company – best known for its FCUK brand – tumbled 19% or 57p to 248p while rival Next slipped 26p to 1654p and Marks & Spencer fell 2.5p to 351.75p.

Fashion house Burberry fared better, rising 5% or 21.25p to 416.25p after announcing strong half-year figures and plans for a £250m (€357m) share buy-back.

Elsewhere, steel group Corus fell 4% on its first day back in the FTSE 100 Index. Corus replaced Abbey National but suffered a 2.5p fall to 53.75p.

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