Vodafone helps FTSE into positive territory
By Michael Hunter -- Last updated: February 3 2009 16:51

Vodafone helped lift the FTSE into positive territory for the first time in four sessions on Tuesday.

The mobile phone group beat third quarter revenue forecasts after benefiting from the weak pound.

The shares leapt 7 per cent to 137.2p after Vodafone reported a 14.3 per cent rise in revenues to 10.47bn. The group also upgraded its sales forecasts for the full-year, raising its revenue range to 40.6bn from 41.5bn.

Overall, the FTSE 100 threw off intraday losses to climb 87 points, or 2.1 per cent, to 4,164.46. The FTSE 250 was 1.3 per cent higher at 6,130.77, a rise of 78 points, driven by resurgent mid-cap investment companies.

Miners once more crowded the top of the leaderboard after the shadow cast by potential capital raisings in the sector was lifted by upbeat broker comment.

Xstrata was 10.9 per cent higher at 627p after analysts at Goldman Sachs lifted their price target on the stock to 909p from 894p. Vedanta Resources rose 5.9 per cent to 575p after Goldman raised its rating on the stock to neutral from sell.

Goldman said Vedantas current valuation led it to believe much of our concern over its heavy investment in aluminium is priced into the stock. On our revised framework it offers modest potential upside to our target price.

Rio Tinto, which on Monday admitted it was in talks with Chinalco of China about asset sales and a possible share sales, reversed early losses to add 4.3 per cent to 16.00.

There was a rare piece of good earnings news from Ferrexpo, the Ukrainian iron ore producer, which reported better than expected results for 2008 due to falling costs. Cash costs slid 21 per cent to $34.70 per tonne in December compared to an average of $43.90 for 2008. Shares in the FTSE 250 group jumped nearly 12.3 per cent to 57p.

BP inched 0.5 per cent higher to 487p despite its fourth-quarter profits being hit by the collapse in crude prices and a sizeable loss at its Russian joint venture. The oil major reported a 24 per cent fall in fourth-quarter net profit of $2.587bn, against consensus forecasts of $2.98bn.

The biggest single faller was London Stock Exchange, down 7.2 per cent at 422p on worries about the implications of European Union proposals for the central clearing of credit derivatives on European soil. The potential move, designed to improve clarity of credit default swaps, re-stoked worries about the consequences of the crisis for Londons status as the continents leading financial centre soon after the LSE forecast very difficult and uncertain market conditions as it reported a 13 per cent fall in trading revenues.

Royal Bank of Scotland, 1 per cent higher at 20.6p, announced Sir Tom McKillop, chairman, was leaving the board ahead of his planned departure in April.

Sir Toms decision to step down came on the same day that analysts at HSBC lifted their rating on the stock to overweight from neutral and set a 35p price target, up from 15p.

The HSBC note, entitled UK Banks Goodbye or good buy? featured a more cautious tone overall, saying: The Bank of Englands assessment of a 50bn capital shortfall for the industry is struck conservatively, in our view, but the widespread... expectation is that the outcome will be far worse, forcing UK banks into further capital injections from HM Treasury.

In New York, major indices made cautious gains as investors digested a mixed set of earnings reports. The Dow Jones Industrial Average was 0.5 per cent higher at 7,977.21 and the S&P 500 added 0.5 per cent at 829.51.