Footsie struggles in early trading

Tobacco stocks jumped today following a favourable European Court ruling on import taxes.

Tobacco stocks jumped today following a favourable European Court ruling on import taxes.

Imperial Tobacco and Gallaher rose almost 2%, although the rest of the market struggled for direction, with the FTSE 100 Index down 14.5 points at 6145.8 by mid-morning.

Other highlights in the top flight saw further gains for ICI and Vodafone, following upgraded stock ratings from Citigroup.

ICI cheered 9% yesterday after disposing of its fragrance and flavourings arm, and was up another 10.75p, or 3%, to 433.75p after the broker changed its guidance from sell to hold. Vodafone was up 2p to 135.5p after Citigroup upped its price target for the stock to 147p.

The move by tobacco stocks reflected relief at the failure of a legal bid to allow online shoppers to buy cut-price cigarettes and alcohol anywhere in Europe. Imperial Tobacco rose 37p to 1859p, while Gallaher added 16p to 943.5p.

Among smaller stocks cheered by the decision, Majestic Wine lifted 5%, or 15.75p, to 323.25p.

The tobacco stocks were beaten to the top of the Footsie leader board by Cairn Energy – up 68p to 1986p – following its placing of 210 million Cairn India shares ahead of its listing in Bombay.

But most of the session’s corporate action came in the FTSE 250 Index.

Risers included Daily Mail & General Trust, up 19p to 660.5p, as it reported record profits and “a gentle recovery” in the advertising market. Non-newspaper work accounted for 47% of operating profits are were a key driver.

Former MFI business Galiform also made progress after 8% like-for-like sales growth since June was “much better” than the 4% forecast by one analyst.

Kesa Electricals cheered 3.5p to 363.5p after it reported a sales surge amid strong demand for flat screen televisions at its Comet stores.

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