Vodafone drags on the FTSE despite strong insurer gains

BRITAIN’S FTSE 100 share index closed slightly lower yesterday, after a dip in index heavyweight Vodafone, dented by weak results from AT&T, offset a surge in insurers following positive broker comment.

The FTSE 100 closed down 4.13 points, or 0.1 per cent, at 5,965.08, having added 0.9 per cent the previous session.

Vodafone, the company with the second biggest UK market capitalisation at £94bn according to Thomson Reuters Datastream, lost ground after AT&T set a disappointing profit target after adding fewer subscribers than expected.

This ensured the index closed in negative territory despite a rise in insurers.

Old Mutual, Aviva and Legal & General were the top risers yesterday, up three per cent to 4.6 per cent, after a bullish note on the sector from HSBC.

HSBC said in a note that efforts by leading insurers to highlight their cash generation have won favour with investors seeking dividend income.

Elsewhere among financials, Man Group added 2.9 per cent after a speciality finance sector research note from Nomura started coverage of the world’s largest hedge fund manager with a “buy” rating and share price target of 380p.

But overall investors were ambivalent about prospects for UK-listed equities.

“In general we are struggling for direction, we’re hovering between the 5,900-6,100 level, underpinned by a reasonably benign macro environment,” said Tim Whitehead investment manager at Redmayne-Bentley.

Banks bounced off early-session lows that were prompted by a cut in Japan’s credit rating by Standard & Poors. “People are already buying into them and using the dips as a buying opportunity, which shows that investors are largely shrugging off the Japan credit rating cut,” Joshua Raymond, market strategist at City Index said.

British clothing retailers were out of favour after Swedish budget fashion chain Hennes & Mauritz posted a surprise fall in fourth-quarter profit.

Next topped the blue-chip fallers’ list, off 2.7 per cent, while Marks & Spencer slipped 1.5 per cent.

Retail stocks have been unsettled by a Christmas trading period which was hit by bad weather, a disappointing drop in British fourth-quarter GDP and fears that the full impact of the UK government’s austerity measures have yet to be felt.

Elsewhere, bid target BSkyB rose 0.7 per cent as strong demand for broadband lifted first-half profits at the media firm, which analysts said will put pressure on majority shareholder Rupert Murdoch’s News Corp to lift its offer for the group.

Shares in International Consolidated Airlines Group, the merged holding company of British Airways and Iberia, and in cruise company Carnival fell 2.7 and 2.3 per cent respectively after disappointing results in the US travel sector.