Market Report: Broker's call for support pushes Vodafone ahead

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The Independent Online

Risers were in short supply on the top-tier index last night, but Vodafone managed to creep up as analysts said fears around the mobile phone giant were wildly overdone.

The telecommunications group, which has lost roughly 12 per cent since March, edged forwards 0.35p to 160p after Bernstein Research's Robin Bienenstock said the market was "assuming the worst for the company on all fronts" and claimed its share price could increase by as much as 50 per cent.

Sentiment around Vodafone has been hit recently by a number of its European peers releasing disappointing updates, with signs that customers are saving money by replacing calling and texting with instant messaging. However, although Ms Bienenstock admitted that Vodafone is "heavily dependent on the macroeconomic environment", the analyst said that "the effects of cannibalisation are likely to be much more modest than current prices suggest".

She also stated that the market was applying "a large discount" to its 45 per cent stake in Verizon Wireless, the biggest mobile operator in the States. Vodafone has not received dividends from the joint venture since 2005, but the analyst said she expected payments to resume next year.

Vodafone, which yesterday was revealed to be teaming up with a number of its UK rivals for a mobile payments joint venture, also benefited from the completion of the sale of its stake in the French group SFR, as it confirmed it would use the proceeds to start a £4bn share buy-back programme.

With fears over Greece intensifying, it was another tough day on the FTSE 100, which was knocked back 43.74 points to 5,698.81. As a result, it has now lost more than 100 points in just two sessions, though it could have been worse as relatively positive employment data from the US prompted the blue-chip index to recover from a session low of 5,644.38 points.

It did not stop the miners suffering, however, with Lonmin and Randgold Resources dipping 49p to 1,382p and 131p to 4,580p respectively. Vedanta Resources was also behind, falling 48p to 1,935p, as its attempt to take control of Cairn Energy's Indian unit was dealt yet another blow.

The deal, which was announced last August, is awaiting approval from India's cabinet, but yesterday the oil minister said it had failed to discuss it at its weekly meeting. Cairn Energy itself was driven back 7.6p to 403.3p after announcing that its chief executive, Sir Bill Gammell, is to become its chairman.

Glencore spent most of the day in the red, but the recently floated commodities trader managed a full recovery, climbing 2.8p to 475.8 by the bell. It was not helped by MF Global initiating coverage with a "sell" recommendation, but Deutsche Bank was more positive, reiterating its "buy" advice despite Glencore's disappointing first-quarter update earlier in the week.

Barclays ended up closing 3.4p behind at 254p, its lowest level for more than two years, as investors continued to react with little enthusiasm to its plans outlined on Wednesday to boost shareholder returns.

Tui Travel tracked back 1.2p to 213.9p as Olivetree Securities dismissed renewed speculation that its parent company Tui AG could be about to make a move to buy the rest of the shares it does not own. Saying the "premium implied in Tui Travel's shares at the moment is too aggressive by some way", the broker added that Tui AG will "struggle to see a smooth disposal" of its stake in the Hapag-Lloyd shipping group, which many believe is needed before it can make a move for Tui Travel.

Laird took the FTSE 250's crown with a canter, shooting up 51.6p to 188.9p – a rise of more than 37 per cent – after the US group Cooper Industries revealed it had a 185p-a-share approach for the electronics company rejected at the start of the month.

Elsewhere, Misys – which has been kept buoyant by bid hopes for a while now – slipped down 9p to 381.8p as Peel Hunt's Paul Morland said that if an approach did emerge, the potential upside was limited. Although vague speculation continued to do the rounds that the Swiss group Temenos could make an approach worth up to 500p a share, the analyst said he would "struggle to justify a price over 450p" and cut his advice to "hold" from "buy".

Premier Farnell was left with the wooden spoon, slumping 24.2p to 250.4p as the electronic components distributor's first-quarter profits failed to meet forecasts. Also dropping following an update was Ashtead, which was 9.6p weaker at 168.4p after its outlook statement proved more muted than had been hoped.

Down on the Alternative Investment Market, Shanta Gold failed to shine despite the explorer's New Luika gold mine having its value significantly increased, as the group was pegged back 1.75p to 25.38p after it said the news meant it was facing an increase in costs.

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