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Feb 08, 2013 04:54 PM IST | Source: ft.com

Vodafone sanguine as Europe woes persist

There was a sanguine market reaction to more weak-looking numbers from Vodafone on Thursday, in a sign that the slowdown in its European business could be priced in to one of the most widely-held stocks on the FTSE 100.


There was a sanguine market reaction to more weak-looking numbers from Vodafone on Thursday, in a sign that the slowdown in its European business could be priced in to one of the most widely-held stocks on the FTSE 100.


The wireless telecommunications provider was among the biggest risers on London's main equities index in afternoon trade, rising 1.6 per cent to 173.2p.


The gain came even as the company reported a 2.6 per cent decline in third- quarter group service revenue, with its southern European business again the hardest hit, down by almost one-fifth year-on-year.


But Vodafone also stood by its target for 2013 adjusted operating profit, saying it should remain in the upper half of the �11.1bn to �11.9bn range.


Analysts at Esp�rito Santo Investment Bank called the numbers "slightly disappointing", adding: "The weakness in the European operations and slowdown in emerging markets may be partly mitigated by potential upgrades stemming from the better than expected growth at [Vodafone's part-owned US unit] Verizon Wireless."


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Tui Travel also rose on a neutral looking FTSE 100, with the stock up 1 per cent to 306.2p after it reported lower underlying losses in the first quarter.


Karl Burns, analyst at Shore Capital, repeated his "buy" rating on the stock, citing a "strong performance from the UK, Nordics and Accommodation and Wholesale businesses".


"Current trading is said to be strong, with average selling prices and margins both ahead year-on-year and 83 per cent of the Winter mainstream programme sold year-to-date," he said.


Burberry was the biggest faller on the main index after a boardroom shake-up at the designer fashion brand surprised investors.


It appointed John Smith, the former head of the BBC's commercial operations, in a new role as chief operating officer, citing his expertise with "global brand management and new media". It also said its finance director, Stacey Cartwright, was to leave. The changes followed a profit warning issued in September, which took nearly 20 per cent off its stock in a single session. The shares fell 5.2 per cent on Thursday to �13.55.


Traders tracked testimony from the incoming governor of the Bank of England, Mark Carney, who appeared before members of parliament on the Treasury select committee.


Mr Carney's debut in the palace of Westminster overshadowed the BoE's Monetary Policy Committee vote at midday, which left policy on hold. Traders also followed a press conference from Mario Draghi, the president of the European Central Bank, after it too kept monetary policy on hold.


Overall, the FTSE 100 was back under the 6,300 points mark. It fell 14 points to 6,281.66, a loss of 0.2 per cent, in line with neutral trade across global markets.

"We are back in a very tight and narrowing range," said Mike van Dulken, head of research at Accendo Markets. "The question now is which way it breaks."

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