Burberry handbags and Carphone Warehouse’s deal with AOL provided sparkle to an otherwise lacklustre market today which struggled to hold on to gains made at the start of the week.
Carphone Warehouse won the backing of the City today for its £370m (€547m) million deal to buy the UK arm of internet provider AOL sending its shares up 8%.
The performance of Carphone was the highlight of an otherwise disappointing session for the London market, as the FTSE 100 Index managed to close just 0.8 points ahead at 6073.5.
The blue-chip fallers board included Sainsbury’s, down 6.5p to 384.5p, as investors took profits despite a seventh consecutive quarter of improving like-for-like sales from the supermarket chain.
Steel group Corus was another stock on the way down, losing a further slice of the takeover premium achieved recently amid speculation of a bid from India’s Tata. Shares were off a penny at 478p.
Investors were also leaving the fund management sector after yesterday’s excitement over potential bids for Amvescap and Man Group failed to develop. Amvescap was 7p lower at 622p, while Man eased 4.75p to 473.25p.
Meanwhile, a new name featured on the Footsie following the first day of official trading for Home Retail Group, which comprises the remainder of the GUS business following the demerger of Experian. HRG – owner of Argos and Homebase - was down 2p at 410p.
Vedanta Resources topped the leaders board with a rise of 45p to 1320p bucking a weak day for the mining sector as commodities slipped back.
But most of the trading interest was in the FTSE 250 Index after the news from Carphone Warehouse and trading updates from a number of other companies.
Fashion house Burberry rose 41.75p to 552p after investors were told of “extraordinary” demand for the retailer’s new range ofluxury handbags.
And George Wimpey investors appeared to be relieved that the housebuilder left profits guidance unchanged today, even though it confirmed details of a slowdown for its Morrison Homes business in the United States. Shares rose 8.5p to 532.5p.
Matalan was another riser, up 6.5p to 195.5p, after founder and chairman John Hargreaves agreed a 200p a share offer for the part of the business he does not already own.
There was also a gain of 4.5p to 221.25p for First Choice Holidays as speculation of a bid from Kuoni lifted shares for a second successive day.
For Carphone, shares were initially lower after it said start-up costs from launching free broadband would be £20m (€29m) higher than expected.
But the stock was later 26.75p higher at 360.25p, reflecting the City’s approval of a deal that gives Carphone more than two million broadband customers in the UK.
The day’s biggest blue chip risers were Vedanta Resources up 45p to 1320p, SABMiller up 22p to 1035p, Kingfisher up 4.5p to 262.5p and British Sky Broadcasting up 9p to 558p.
The day’s biggest blue chip fallers were Icap down 13.25p to 518p, Drax down 20p to 792p, Brambles Industries down 9.75p to 490.25p and Sainsbury off 6.5p to 384.5p.