FTSE falls into negative territory
Fading hopes of a bidding battle for mobile phone operator O2 drove the FTSE 100 Index into negative territory today.
Investors reacted glumly to news that German firm Deutsche Telekom was not planning a counter bid to rival the £17.7 billion takeover of O2 by Telefonica.
With shares in O2 falling more than 5%, the FTSE 100 Index moved 0.2 points lower to 5344.1 by mid-morning.
The market was finding support from financial services firms – led by insurer Royal & Sun Alliance after it settled a long-running legal row in the United States.
Shares in R&SA were 3% or 2.75p stronger at 103.25p to be the session’s top riser so far, while Friends Provident advanced a penny to 178.75p in the sector and banking giant Royal Bank of Scotland lifted 26p to 1601p.
Catering giant Compass added 3p to 193p as investors took the view that there was substance to reports that private equity firms such as Texas Pacific Group were contemplating a bid.
However, dwindling hopes of a takeover battle pushed the share price of O2 below the 200p that Telefonica has agreed to pay for control.
O2 dropped 11.75p to 197.5p as investors believed competition issues and a lack of financial clout would rule out many of the big mobile phone operators from fighting Telefonica for control.
But there were smiles elsewhere in the telecoms sector as Vodafone added 1.75p to 151.25p, BT Group ticked 0.25p higher to 211p and second-tier firm Virgin Mobile lifted 10p to 314.5p.
Outside the top flight, aviation services firm BBA rose 8% or 23p to 314p after announcing plans to spin off its unit making fibres for products such as nappies and shoelaces.
Celebrity jeweller Theo Fennell lifted 9% or 3.5p to 41.5p after being approached by a party wishing to make a significant investment.
