Britain's leading shares fell this morning with Europe tracking falls in Asian and US stocks as credit worries persisted, but Vodafone cheered investors by raising forecasts after solid first-half results.
Mobile phone giant Vodafone Group added more than three percent to lead the FTSE 100 after it raised forecasts for full year operating profit, sales and cashflow after a robust set of half-year results topped consensus expectations. By 0831 GMT the FTSE 100 was down 43.8 points, or 0.7 percent at 6,294.1, weighed by banks and commodities. About 90 percent of the index traded lower.
US stocks fell for a fourth session yesterday, led by a widening sell-off in technology stocks late in the day on worries about business spending, while a drop in oil prices hit energy producers' shares. The yen retreated from an 18-month high against the dollar and a two-month high versus the euro this morning, as dealers booked profits on a surge in the Japanese currency sparked by unwinding of risky carry trades.
Northern Rock lost 0.9 percent. The lender has hired an expert in competition law to consider whether the bank could get around strict European rules on state aid so that government funding could continue beyond March, the Daily Telegraph said. Separately, the Daily Mail quoted a source close to the bank as saying that the board doubts whether Luqman Arnold's investment vehicle, Olivant Advisers, has the firepower to drag Northern Rock out of its morass.
Energy shares slipped as US crude oil fell. Royal Dutch Shell dropped 1.3 percent and its rival BP shed 0.9 percent. Miners also exerted downward pressure on the index, all trading in negative territory. British telecoms group Cable & Wireless added 2.5 percent after it posted a 29 percent rise in underlying first-half core earnings and increased its guidance for the Europe, Asia and US unit. Nuclear power firm British Energy fell 1.6 percent after it reported a six percent rise in first-half core profit, and said it was considering paying an extra dividend in February.
With little else on the day's economic calendar, investors will likely keep an eye on UK inflation data due later this morning for further clues about the direction of interest rates.