Market Report: Force is not with Vodafone in the US

There was a time when some were calling for Vodafone to get out of Verizon Wireless. The critics have been pacified somewhat by the mobile phone giant's US joint venture paying a multibillion-dollar dividend, but yesterday the City was fretting over the possibility that Vodafone's partner in the business may want it out.

As the 55 per cent shareholder, Verizon Communications is the parent company of Verizon Wireless and controls the purse strings. It approved a dividend payment worth £2.8bn to Vodafone last year, but Jefferies' Jerry Dellis believes expectations that such a windfall will be regular are too high.

While the analyst admitted the two companies "emphasise good relations", he added that "their strategic interests … are ultimately in conflict".

"We believe that Verizon Communications would still ideally like to gain full control of Verizon Wireless in due course," he said, adding that this would be more expensive while Vodafone's share price was strong. As a result, he argued, a "rational decision" might be for Verizon Communications to either hold or trim Verizon Wireless' payouts.

Claiming Vodafone's investors are underestimating this risk, Mr Dellis downgraded his advice from "buy" to "hold". The scribe also warned it was at risk of a step-up in competition from rivals in ex-growth markets, as the group – whose recent adverts have starred Yoda – slipped 1.55p to 179.25p.

In fact it was one of just four blue-chip fallers as the FTSE 100 ended the month on a high. Traders were pleasantly surprised to awake yesterday to news of a deal being reached by EU leaders in Brussels, and the benchmark index went on to jump up 78.09 points to 5,571.15.

Those missing out included Pennon, which was making its Footsie debut after coming in for the energy group International Power. With investors moving away from defensive stocks, the water group shifted back 15p to 762p, despite analysts at UBS calling it the "most likely M&A candidate" in the sector.

Also behind was Barclays, as the continuing fallout from the Libor scandal pushed it down another 2.75p to 162.85p. Rivals Royal Bank of Scotland and Lloyds, however, rebounded 8.9p to 215.3p and 1.16p to 31.1p.

Ahead of an expected vote last night by US politicians on a hard-fought agreement on funding for roads, CRH raced up 84p to 1,232p. Spending on infrastructure in the States contributes a large chunk of the building materials group's profits.

On the FTSE 250, Ocado was once again stuck in reverse. The online grocer was knocked back another 1.8p to 77.7p, meaning the stock has lost 28 per cent since Tuesday's interim results, after Goldman Sachs – which helped to bring it to market at a price of 180p – decided to remove it from their "pan-Europe buy list" and downgrade their advice to "neutral".

It was not the only Goldman float in a spot of bother – Promethean World, whose IPO was priced at 200p, plummeted to a new all-time low on the small-cap index. It dropped 12.75p to 22p after its latest profit warning, which was blamed on a lack of demand for its interactive whiteboards.

Meanwhile, Betfair – another floated by Goldman – did advance 13p to 748p following the release of its preliminary results. However, the betting firm remains nowhere near its 1300p issue price.

A cut to its production forecast, thanks partly to a lack of equipment availability, meant Avocet Mining slumped a huge 60.75p to 90.05p. It was a different story for fellow gold digger Allied Gold Mining which powered up 48.5p to 140p on small-cap index after agreeing to be snapped up by Australia's St Barbara.

Punters' favourite Gulf Keystone Petroleum managed to move off a seven-and-a-half month low by spurting up 21.27p to 163.5p on Aim. Despite its recent weakness the Kurdistan-focused explorer still has plenty of fans, with Fox Davies' Steve Asfour – who is one of those who thinks it could become a takeover target – saying its valuation was "incredibly attractive, and really does place them on the 'wanted' list for any serious players out there".