Market Report: Vodafone climbs on talk of stake sale to Verizon

Repeated denials from Arun Sarin, the chief executive of Vodafone, over plans to continue asset sales seem to be having no effect on market speculation.

Talk that Vodafone may be on the verge of selling its 50 per cent stake in Verizon Wireless to Verizon has done the rounds on several occasions in recent sessions. There seems to be little doubt Verizon is keen to get its hands on the stake, and with the company raising more than $20bn (£11bn) through asset sales, finding the finance is not seen as a problem.

The biggest stumbling block to a deal being struck is tax. Should Verizon offer the $50bn traders value the stake at, Vodafone could end up giving the US Treasury almost $20bn in capital gains tax. Unless Vodafone can come up with a plan to limit the tax implications of a sale, Verizon may have to offer more to tempt Mr Sarin into accepting an offer. Vodafone closed 1.25p better, having earlier been 5.25p better, at 124.75p.

The London market spent most of the day well in the red with only a handful of stocks in positive territory by noon, before better-than-expected February trade deficit figures in the US provided a boost to London equities as New York opened strongly. Despite that, the FTSE 100 closed 15.7 lower at 6000.8.

Miners continued to give back more of the gains made in recent sessions, even as Rio Tinto held its annual meeting yesterday and confirmed the very strong financial position it is in. It dipped 37p to close at 3,092p, while the rival BHP Billiton lost 21.5p to close at 1,134p and Kazakhmys continued its slide on profit-taking, 28p weaker at 1,177p.

The retailer Marks & Spencer continued where it left off on Tuesday, with a raft of heavyweight brokers issuing bullish notes after Tuesday's excellent trading statement. JP Morgan, Deutsche Bank, Citigroup and UBS urged their clients to buy the stock, which added 3p to 589p. Deutsche was particularly bullish, upping its target price on the stock to 655p.

Elsewhere in retail, Austin Reed's full-year numbers were received warmly by the market, although the company said the strong growth in the first 10 weeks of the year is unlikely to be maintained. The company has generally been overlooked by traders looking for the next takeover target, but that situation did not last long as buyers piled into the stock, 8p better at 98.5p.

The brewing group SABMiller topped the list of risers in the large caps as it closed at 1,153p, up 44p. Traders and brokers were pleased with a trading statement confirming the full-year numbers would be in line with market expectations. Scottish & Newcastle, the UK's second-largest listed brewer, regained some of Tuesday's losses, closing 9.5p better at 516p.

Despite a 16.25p fall to 463.5p, traders expect to see some sort of decision from Robert Tchenguiz in the next day or two regarding his bid for the pubs and bars group Mitchells & Butlers. Bullish dealers hope an offer will come in today, pitched at around the 550p level.

Confirmation that Nasdaq acquired a 15 per cent stake in the London Stock Exchange after the market shut on Tuesday sent the shares into orbit yesterday, with some traders talking about a full bid coming in at up to £15 a share.

LSE was the best performer in the FTSE 350, adding 160p to 1,198.5p, 22.5p higher than the price Nasdaq paid for Threadneedle Asset Management's stake. Many traders think a full bid is around the corner, believing Nasdaq would rather take on the short-term cost of a full bid than see LSE link up with Euronext or the Deutsche Börse.

Shares of iSoft, the healthcare software supplier, were again among the leading gainers in second line stocks as brave traders picked up the stock after weakness caused by speculation over the financial stability of the company. The stock is volatile at the best of times, but added 8p to 125.5p despite continuing rumours that Accenture is considering using an alternative provider for the NHS IT contract.

The growth of e-mail may have harmed traditional letter-writing but it certainly doesn't seem to have harmed stamp collecting. Stanley Gibbons, the world's leading philately company, reported record first-quarter results with turnover 48 per cent higher than in the same period last year. There was good demand for the shares, which closed 18.5p better at 158p.

Finally, the emerging-markets funds manager City of London Investment Group enjoyed a strong opening day after having been placed by Teather & Greenwood at 180p. The company, which has about £2.9bn of funds under management, raised no new funds in the placing and closed the session 16.5p better at 196.5p.