Market Report: M&A speculation continues to swirl around Vodfone

Vodafone was heavily traded yesterday as mergers and acquisitions (M&A) speculation continued to swirl around the under-pressure telecoms major.

It has reportedly made a €7bn (£5.8bn) bid for Spain’s largest cable operator Ono, after weeks of talk around a potential deal.

Vodafone will be keen to get a jump on its US rival, Liberty Global, which has also been linked to Ono, after reporting its seventh-consecutive quarter of falling revenue last week.

Alastair McCaig, a market analyst at IG, said: “In view of the billions that will still be left over in the pot, it seems unlikely this will be the last M&A activity for Vodafone in 2014.”

Scribblers at Goldman Sachs agree, rating the firm a buy – but they think Vodafone could also be an acquisition target. Last month the US telecoms giant AT&T was forced to deny speculation it was planning a bid, disqualifying it from making any moves for six months. Vodafone closed flat at 222p.

Buoyant gold and silver prices sent Fresnillo to the top of the Footsie, up 70p at 863.25p, while Randgold Resources added 106p to 4,528p. On the mid-cap index, African Barrick Gold also made big gains, rising 14.9p to 239p.

UBS tipped Anglo American’s Brazilian iron ore project Minas-Rio for big things, calling the site, due to start production at the end of this year, a “game changer”. Anglo dug up 21p to 1,501p.

After crude prices rallied last week, oilfield services provider Petrofac had an upgrade from HSBC to overweight, drilling up 37p to 1232.5p.

But gains on the benchmark index were tempered by uncertainty surrounding utilities.

Energy Secretary Ed Davey’s calls for an inquiry into gas profits at the “Big Six” providers sent British Gas-owner Centrica 5.3p lower to 308.8p, while SSE also slumped 6p to 1349.5p.

G4S was another loser, down 6.1p at 229p, after a downgrade from Panmure Gordon, which said there were “too many dark clouds on the horizon” for the outsourcing giant.

Hargreaves Lansdown continued to feel the effects of last week’s disappointing update, falling 49p to 1305p.

The FTSE 100 rose 19.87 points to reach 6,591.55.