FTSE posts modest gain, Vodafone news fails to thrill

Mobile giant Vodafone held back progress by the FTSE 100 Index today as investors gave a lukewarm response to acquisition news.

The mobile giant lost almost 3% of its market value after it emerged it had won the bidding race for Turkish firm Telsim.

This limited gains by blue-chip shares on a day when oil stocks put in a strong performance, leaving the Footsie 5.7 points higher at 5507.2 by the end of the session.

The performance mirrored sentiment across the Atlantic, where the Dow Jones Industrial Average was around 10 points higher by the end of closing in London.

Vodafone weakened 3.5p to 124.75p to make it the second heaviest top flight faller behind online gaming giant PartyGaming.

The owner of PartyPoker continued to slip back having made strong gains last week, losing more than 5% or 7.5p to 128p after broker Lehman Brothers downgraded its rating from “overweight” to “underweight”.

In contrast, exploration firm BG Group helped the Footsie end the session in positive territory as its stock cheered 12p to 559.5p. It was joined on the risers board by Cairn Energy, up 31p to 1905p as the price of a barrel of crude oil held firm above the $61 mark.

Heavyweight BP also made gains – ahead 3.5p to 634p – while shares in Royal Dutch Shell cheered 11p to 1879p after it announced plans to invest £2bn (€3bn) more than previously expected on long-term infrastructure projects.

Argos owner GUS was also enjoying a good session and moved 14.5p ahead to 983.5p as investors welcomed its Burberry demerger.

But fellow retailer Marks & Spencer was in worse shape despite the EU ruling in its favour in a tax rebate issue with the UK Government. Shares in M&S, which have had a good run recently, fell 7.5p to 478p.

Mining companies were also a drag on the top flight with Xstrata down 26p at 1351p and Antofagasta off 12p at 1756p.

Investors were not impressed by news from confectionery giant Cadbury Schweppes that it would not hit its profit margin targets in 2005 because of soaring costs on the back of rocketing oil prices.

Shares fell 8p to 544p as it also announced £70m (€103.7m) plans to invest in a new chewing gum factory in Poland.

Elsewhere, floor coverings retailer Carpetright lifted 2%, up 19p to 1025p, as it countered weaker profits by saying it was “well positioned” to grow sales and profits as soon as the market improved.

But half-year profits growth of 92% was not enough to tempt investors to restaurant group La Tasca, which weakened 7p to 132.5p following its recent strong run.

The highest Footsie risers today were Hilton Group up 9.5p to 346.75p, BG Group rising 12p to 559.5p, Royal & Sun Alliance up 2.25p to 120p and Centrica adding 4.25p to 243p.

The heaviest fallers were PartyGaming down 7.5p to 128p, Vodafone off 3.5p to 124.75p, Rentokil Initial down 3.75p to 162.75p and Scottish & Newcastle off 9.25p to 475.25p.