Vodafone drags FTSE back

The FTSE 100 index slid into negative territory today after shares in the market’s biggest stock fell by more than 4%.

Vodafone weakened 6p to 137p as investors reacted to reports that the mobile phone giant could be dragged into another high-profile bid battle.

The decline of Vodafone offset gains in the banking sector as the Footsie gave back early gains to stand 21.6 points lower at 4715.2 by mid-morning. Firmer-than-expected inflation figures, with the consumer prices measure up 0.3% to 1.5%, also put pressure on the top flight.

But the main focus of the session proved to be Vodafone after it was claimed that US partner Verizon was mulling a bid for rival Sprint – just months after Vodafone knocked confidence with a failed bid for AT&T Wireless.

The stock was under pressure on another front as an investment bank scaled back an earlier forecast that the group would outperform the sector.

On a brighter note, HBOS shares surged almost 4% – up 27.5p to 803.5p – after the company told the market it expected results ahead of expectations. It also promised to buy back £750m (€1.1bn) of shares next year.

A clutch of rival stocks benefited from the update with Lloyds TSB up 1.5p at 444.5p, Northern Rock 3p higher at 778.5p and HSBC 1p stronger at 871p.

There was also a strong gain for publisher Pearson after it announced a deal to sell its 79% stake in the owner of Spanish sports newspaper Marca. The £500m (€723.3m) proceeds from the sale impressed analysts as shares rose 8p to 621.5p.

Outside the top flight, tour operator First Choice Holidays surged 4%, or 5.75p to 149.25p, after announcing record profits amid signs that a recent business shake-up was bearing fruit.

Carpetright rose 21p to 1110p, following a 12% rise in half-year operating profits to £31.9m (€46.1m).