Market Report: Vodafone buzzing on talk of Apple iPhone deal

Telecoms stocks were buzzing yesterday, with the UK's standard bearers for mobile phones and fixed landlines among the top risers. Vodafone shrugged off several issues to add 2.5p to 160p by the end of the day. Traders ignored the fresh assault from Efficient Capital Structures, the activist investor calling for a break-up of the group, which once again demanded it sell its stake in US peer Verizon. Nor did they care as the European Union turned down the appeals of five mobile phone companies demanding the return of £3.3m-worth of VAT paid to the UK Government over 3G licences. Investors' mouths were instead watering over reports that Vodafone would be unveiled as Apple's partner to distribute its eagerly anticipated iPhone in Europe. BT Group also whetted the market's appetite, rising 5.5p to 320p.

For the second day in a row, the FTSE 100 traded down more than 40 points in the early morning session, but was unable to drag itself into the black, finally closing down 29 points. The market was initially hit once more by further sub-prime fears from across the Atlantic, as well as share prices falling in the banking sector. Barclays shed 10p to 710p as it moved a huge step closer to securing ABN Amro after a ruling in Holland.

The life insurance sector also dragged the FTSE 100 down, with Friends Provident, Prudential, Aviva, Resolution, Old Mutual and Standard Life all among the top fallers.

Another casualty of the US was BAE Systems, which plummeted 8 per cent on news the US was going to investigate allegations of bribery. The defence and aerospace company revealed the US Department of Justice had launched a formal investigation over potential breeches of anti-corruption laws. Despite Panmure Gordon's assertion that it was unlikely to have a financial impact, it ended the day as the biggest faller, down 34.5p at 405p.

It was a quiet day for the mid tier. Much of the movement was driven by trading updates, with Charter, the welding and industrial fans group, rising after a bullish trading statement at its annual general meeting yesterday. The market backed management's confidence that it will increase capacity and expand in North America and Europe. Its shares closed up 26p at 1,031. A flurry of late trading drove Micro Focus to the top of the second-tier risers, up almost 8 per cent to 270.2p.

The oil and gas group Hunting released an in-line trading statement, which said client demand would increase capital expenditure by almost half compared with a year ago. It added that it could be hit by potential exchange rate changes. Following so-so notices from the brokers, traders deserted the stock in droves. It closed down 58.5p at 709.5p.

It was a trying day for Carpetright, down 13 points to 1,222p after a cautious trading update in which it was still no clearer on the potential takeover bid by group chairman and chief executive Lord Harris. The update said an increase in rates had hit sales and that conditions had been challenging since January.

Traders warned of a potential peak in the UK commercial property market, as market rumours curbed buying in the sector. One said: "Commercial property has been very attractive for the last few years, but today there were far more sellers. People are getting nervous."

The biggest collapse outside the FTSE 350 came from Biofuels Corporation, which slumped almost 40 per cent after revealing it had turned to Barclays bank to try to prevent it from going bust. Traders dropped the stock, which sunk 4.55p to 7.20p after a statement from the management yesterday. The operator of the largest biodiesel plant in the UK said a debt-for-equity swap with the UK bank was essential to avoid liquidating the company. It blamed a combination of lower biodiesel prices and the higher cost of vegetable oil. Biofuels Corporation, which announced a £32.1m pre-tax loss yesterday, said it had explored numerous options including a sale of the company.

China Medical System Holdings, the pharmaceutical group, made a solid debut on AIM, trading up 6 per cent at 146.5p by the close. The placing, run by Evolution Securities, had an issue price of 138p, raising £10m for the company, which is targeting a push into Europe.

Finally, Plexus Holdings, the oil and gas engineering services company, was one of the highest movers on AIM. It leapt 30 per cent to 56.5p after Skye Investments, controlled by Robert Adair, Plexus's non-executive chairman, bought 1.4 million shares for £600,000.