Reports of M&A in the telecoms sector kept the FTSE 100 out of the red to finish the week in positive territory. There have been rumours that US giant AT&T has been eyeing Vodafone for some time but a Bloomberg report pushed investors into a buying frenzy yesterday.
Reports suggested AT&T is lining up a bid for next year that would see it create a $250bn (£156bn) giant. It would also see it break up the blue-chip telecoms group and sell off Vodafone's African and Indian businesses.
AT&T was said to have held talks with Vodafone's US partner Verizon about a deal but instead Vodafone agreed to sell its $130bn stake in US mobile joint venture Verizon Wireless. AT&T's interest in Vodafone stems from a desire to enter Europe's wireless market, and it could also be looking at other groups over here such as EE (Everything Everywhere).
The excitement about M&A – albeit a way off – kept the interest in Vodafone alive all day. The shares dialled up a jump of 8p, or more than 3 per cent, to, which helped the FTSE 100 index into positive territory and added 8 points to the index "making the wider market seem a lot better than it actually is", said Joe Rundle, head of trading at spread better ETX Capital.
The benchmark index ticked up 3.31 points to 6734.74 but further gains were held back by weaker overall sentiment. Brenda Kelly, senior market strategist at spread better IG, said: "An investor aversion to the key mining and banking components on the UK benchmark today ensured that even Vodafone takeover speculation could not boost the FTSE to a weekly close above 6754 – something that has not occurred in over 13 years."
The pervading air of caution in the City and across Europe re-emerged as poor economic data led investors to focus on a possible ECB rate cut next week.
The euro had its biggest one-day decline in 16 months, falling 1.11 percent against the dollar. The sell-off was triggered by weaker data from the eurozone.
Engineer and defence specialist Meggitt was the worst performer as it reduced sales growth forecasts and nosedived 63.5p to 509p.
The banks were in the doghouse amid revelations that traders from Barclays and Royal Bank of Scotland have been suspended over allegations of possible manipulation foreign exchange market. Barclays was 7.3p weaker at 256.3p. Disappointing profits at RBS saw it fall 27.6p to 340p.
One bank on the rise was HSBC, ahead of its trading update on Monday. Investors expect it to have had a better third quarter than rivals.
HSBC also promoted its group chief risk officer Marc Moses to its main board. It collected 5.2p to 687.3p.
Better data out of China should have automatically boosted the mining sector but many of the diggers remained at the bottom of the table as investors remained risk adverse.
The gold digger Randgold Resources tumbled 133p to 4,507p and analysts at RBC Capital cut their target price to 5,400p. However Rio Tinto was one of the popular stocks and added 26p to 3,184p. Over on the small-cap index, logistics group Wincanton won a contract from Asda to supply it with 1,800 home shopping vans ,and it drove up 3.75p to 131p Wincanton will be reporting its first-half results next week.
Shipping services group Clarksons has bought maritime tool supplier Gibb Tools for £12.7m. Analysts at Panmure Gordon said the deal will help Clarksons' port and agency arm, allowing it to tender for larger contracts. Clarksons sailed up 47p to 2,063p.
On AIM, drugs discovery group Summit received approval for one of its clinical trials for its therapies for Duchenne muscular dystrophy but it was unmoved at 11.375p.
Africa's low-cost airline Fastjet said its first flight from Dar es Salaam to Mbeya, in south-west Tanzania, departed on schedule and is the fifth Tanzanian destination in its network. It flew up 0.1p to 3.62p.
West Africa-focused oil and gas explorer Lekoil is raising around £62m by placing 113.28 million shares at 55p, and dipped 0.5p to 56.25p.