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Vodafone bucks FTSE weakness on takeover report
by Chris Marshall on Nov 01, 2013 at 09:57
Shares in Vodafone (VOD.L) crept higher, defying an overall market decline, on a report that a US rival was considering a takeover of the firm next year.
Vodafone shares rose 2.2% to 228p after the report from Bloomberg News, citing ‘people familiar with the matter’. It said AT&T was considering a bid for the telecoms company which will halve in size following the hugely profitable sale of its stake in Verizon Wireless in the US.
Broader markets traded slightly lower, following declines on Wall Street on Thursday, with the UK’s FTSE 100 off by 10 points at 6,726. The benchmark index will close flat on the week if it remains at this level, but rose nearly 5% in October.
European stocks were also down, with the Euro Stoxx 50 down 0.2%. The euro fell further against the US dollar, down 0.3% to $1.3538 in a fifth day of declines, after sharp losses yesterday for the single currency. Traders bet that the European Central Bank will cut interest rates after some recent poor economic data.
The losses come despite more improved news on the Chinese economy. The official gauge of manufacturing showed a further strengthening of the crucial sector in October. The Purchasing Managers’ Index (PMI) rose to an 18-month high of 51.4. This suggests ‘recovery momentum might be slightly stronger than what markets had expected,’ said Bank of America Merrill Lynch economist Lu Ting.
In London some disappointing corporate results were weighing on the index. Royal Bank of Scotland (RBS.L) announced it would not be broken up into good and bad banks, but instead that an internal ‘bad bank’ would be created to ring-fence £38 billion worth of its riskiest assets.
The news on the fate of the 81% state-owned bank came as it announced a quarterly pre-tax loss of £634 million. Shares fell 3.6% to 354p, even as analysts pointed to reduced political uncertainty now faced by the bank. ‘Management can focus on execution rather than politics,’ commented Nomura analyst Chintan Joshi. Nonetheless, on first impressions the management have maintained ‘status quo’ he added, keeping his ‘reduce’ rating.
Meggitt (MGGT.L) shares slumped 9.4% to 519p after the engineering group published an unexpectedly weak third-quarter update, reporting that trading was slightly below expectations. The supplier of parts for aircraft has been hit by short-term production difficulties at its Sensing Systems business, delays in one of the energy businesses, and the negative impact of the strengthening of the British pound against the US dollar.
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by Danielle Levy on Dec 12, 2013 at 09:03