Market Report: Vodafone talked up by bullish broker notes

In a pallid blue-chip index, there were very few winners as weak US economic growth data had investors running for cover. Vodafone, the mobile telecoms group, was one of only a handful of stocks to close in the black as a raft of broker upgrades saw the shares close 1.5p better at 134.25p.

The sector has been given a new bout of momentum by strong results from France Telecom, which includes two large mobile businesses, Orange and Auna. Citigroup, Morgan Stanley and Dresdner Kleinwort all published bullish notes on Vodafone yesterday, although Citigroup warned its clients not to buy the shares in the hope that the company will sell its US wireless business to its partner Verizon. Dresdner was the most bullish, giving the shares a price target of 165p.

The chances of a takeover at the building materials group Hanson now look slim after Cemex, the Mexican cement group, launched a A$12.8bn (£5.2bn) offer for its Australian rival Rinker Group. Traders had been hoping that Cemex would follow up the 2003 acquisition of RMC with a bid for Hanson. Shares in Hanson fell 33p to close at 711p. News of a further slow down in US housing also did the stock no favours.

In the wider market, London shares were unable to hang on to early gains as US GDP figures showed the slowest rate of growth for three years. The FTSE 100 index closed 23.9 worse at 6160.9. Major pharmaceutical stocks AstraZeneca and GlaxoSmithKline continued to attract strong selling after Thursday's disappointing news on new drugs, with Astra another 123p weaker at 3,139p and Glaxo off 41p at 1,410p. The broker Credit Suisse cut its forecasts for both firms.

There was a flight to safety with utility stocks all benefiting from the weakness in racier growth stocks. International Power added 3p to 334.5p, Scottish & Southern Energy climbed 22p to 1,321, and Drax Group added 18p to close at 804p.

Rathbone Brothers, the stockbroker and fund management group, fell 28p to 1,155p, on profit-taking and a negative read across from the Evolution Group's profit warning. Shares in Rathbone have been stuck in a trading range for the past six months, but it looks like a recent breakout on the chart is not going to signal a strong end-of-year run. Meanwhile, Evolution's surprise warning, five weeks after it declared it was on target to meet expectations, knocked the shares back 4.5p to 127.5p.

Despite the collapse of bid talks earlier in the week, Morgan Crucible is finding good support among analysts. Citigroup became the latest broker to make positive comments about the ceramics group, reiterating its "buy" recommendation and upping its target price to 295p from 260p. Shares in Morgan Crucible edged 2.5p better to 263p.

Premier Oil was high on the list of mid-cap risers after reports in Italy suggested ENI, the national oil company, is among those considering making a bid for Premier. So far there is no firm indication as to who might be in talks with the company, although early suggestions that Shell are the bidders appear to have subsided. Shares in Premier surged 34p to close at 1,310p, but the word in the market is that a bid could take the shares as high as 1,400p.

If the government in Uzbekistan gets its way, Oxus Gold's days could be numbered. Amanstaytan Gold, in which Oxus has a 50 per cent stake, has been charged $220m (£116m) in back taxes. Oxus's share of the bill, $110m, is roughly 30 per cent more than its market capitalisation. Needless to say, it is appealing against the ruling, but in what is likely to be a long process investors are unlikely to drive the shares higher. The stock closed 6.25p worse at 9.5p.

Tanzania Gold has been strong over the past few sessions and ended the week 8.5p firmer at 56.5p. The word in the market is that a drilling report, due to be announced next week, will be substantially better than previously forecast. However, with the shares almost 50 per cent better over the course of the week, the results will need to be spectacular if a bout of profit-taking is to be avoided.

D1 Oils, an AIM-listed producer of biodiesel, has been the subject of a handful of takeover rumours in the past. Talk of a 300p takeover offer sent the stock 18p better to 192p, but speculation that the oil giant BP might bid for the company found little support.

There was a good first day of dealing for Matchtech, a specialist technology recruitment group, after it raised £22.2m of new funds through a placing by the broker Arbuthnot Securities. The shares were placed at 310p, giving the group a market capitalisation of £76.1m. The stock closed at 344.5p.

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