Footsie withstands C&W shock

The London market absorbed the shock of a warning from Cable & Wireless about earnings prospects at its troubled UK business to tip toe ahead today.

Shares in C&W plunged 15% to shake the faith of investors in the telecoms sector and drag heavyweights Vodafone and BT Group into the red as well.

But gains in the oil sector where BP and Royal Dutch Shell hit their highest levels for at least three years ensured the FTSE 100 Index moved ahead by 2.6 points to 5782.4 by mid-morning.

The next week is key for both companies as investors expect them to unveil record annual results, while confidence for the future was underpinned by high oil prices and the likelihood that cartel Opec will maintain current output levels.

BP was also assisted by an upgrade from broker Citigroup as its shares lifted 7.5p to 689.5p, while Royal Dutch Shell added 39p to 2041p.

Friends Provident led the Footsie with a rise of 4% – up 7.25p at 201.5p - after investors cheered better-than-expected sales for the fourth quarter.

Imperial Tobacco reassured investors that shrinking markets in the UK and Germany were not threatening its full-year expectations and this boosted shares by 2% or 36p to 1693p.

But most of the focus was on Cable & Wireless, down 17.25p to 97.25p, after it said UK earnings for the next financial year would be static.

It also announced a restructuring and said chief executive Francesco Caio would leave after three years in the job. For Cable investors, today’s share price is a far cry from the 800p achieved in 2001.

The mood was grim elsewhere in the telecoms sector where BT Group dropped 3.25p to 204.5p and Vodafone drifted 3p to 117.75p.

Another stock on the way down was Kazakhmys – off 15p to 870p – after the miner said fourth-quarter production of copper was lower than a year ago.