Vodafone Helps FTSE Inch Higher

Londons top stocks held steady, having closed out last week at their lowest since early October. AstraZeneca climbed on news a rivals drug had failed, while Vodafone and InterContinental were buoyed by a broker tips.

The FTSE 100 index was positive by a couple of points my late morning, having peaked up 31.3 at 6052.8 after about an hour. The FTSE 250 jumped 42.9 to 10741 after foods group RHM confirmed a bid approach. That came as the dollar recovered marginally from its 14-year low against sterling, with profit taking providing the main source of support for the greenback.

An overview of world markets

Vodafone added 1.75p to 134.25p after Credit Suisse moved to "outperform" from "neutral" on the mobile phone group, on hopes that a benign operating trends will mean its European division can top earnings forecasts.

The biggest threat on the horizon is that Vodafone will make a bid for a broadband provider or local-loop telecoms firm, "potentially costing around £5 billion," Credit Suissse said. However, it said the cost to wireline earnings was unlikely to be too significant, and was equally concerned that rivals will buy all the available targets while Vodafone is in "wait and see" mode.

AstraZeneca was up 23p to £29.13 on news that Pfizer has dropped development of a product which was a potential key competitor for cholesterol treatment Crestor, the UK firms second-biggest seller. Pfizer said over the weekend that it had ended all trials of torcetrapib because of an unexpected number of deaths among patients.

"AstraZenecas Crestor is now facing a clearer run and is under less pressure to find a suitable combination to match competitors," said UBS. "We therefore expect the market to gain more confidence in its Crestor forecasts". The broker also suggested that Pfizer, having lost one of its major pipeline drugs, could pursue a more aggressive acquisition strategy.

Intercontinental Hotels took on 12.5p to £10.30 as Morgan Stanley raised a target price on the lodging group to £12.20 from 950p and said its growth profile remains undervalued.

Intercontinental can "generate sustainable double-digit EPS growth via accelerating room additions, solid hotel trading, upside in its owned hotels, and strong cash generation", said the broker.

RHM led the mid-cap risers, ahead 83.25p to 355p after agreeing a £1.227 billion takeover by peer Premier Foods to create the largest food producer in the UK. Premier was ahead 9.25p to 278.5p.

Northern Foods, which is rumoured to have been the subject of private equity interest of late, added 4.25p to 112.25p.

Meanwhile, EMI inched up 5p at 295p after the Sunday Times reported that said the music publisher could recieve, and reject, a £2.5 billion offer from private equity house Permira this week. EMIs board, which admitted to takeover talks last week, is reportedly not willing to entertain a 310p per share approach.

Among the minnows, Evolutec lost more than two-thirds of its value, down 90.5p to 43.5p after the biotechnology developers hayfever treatment, developed from the saliva of tics, proved no more effective than placebo in a clinical trial.

Evolutec will continue to research using tic saliva as a treatment for dry eye and an anti-inflammatory following cateract surgery, but the hayfever treatment had been its lead product. The comprehensive failure also means trials for asthma applications will likely to be mothballed.

This report is continuously updated. Users of Internet Explorer should press control and F5 to make sure they are reading the most recent version.

Do you have a comment to make on the markets? Write to Times Onlines Business desk at markets@timesonline.co.uk , where we will publish the most interesting e-mails.

This website adheres to the system of self-regulation overseen by the Press Complaints Commission. The PCC takes complaints about the editorial content of publications under the Editors Code of Practice, a copy of which can be found here.

Tag Cloud

External Information

Additional Information

Where Am I?