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Vodafone pushes UK's FTSE in sight of all-time high

Friday, 21 February 2014 - 5:04pm IST | Agency: Reuters

Britain's top shares rose on Friday, lifted by bid speculation around index heavyweight Vodafone and by investors welcoming possible restructuring plans at Royal Bank of Scotland.

Mobile operator Vodafone rose 2.3% to 235 pence and was the most traded share on Britain's blue chip FTSE 100 index.

Traders highlighted comments by BofA Merrill Lynch and UBS that Vodafone was a potential bid target after it completes the sale of its stake in US mobile phone company Verizon Wireless.

UBS raised its target price on Vodafone to 275 pence from 260 pence. "'New Vodafone'... starts near a sector multiple at 6.1 times, too low in our view," UBS said in a note. "If the market does not realise this value, we wonder if a third party could."

Vodafone added the most points to the FTSE, with the index up by 12.35 points, or 0.2%, at 6,825.34 points in mid-session trading, taking its rally since an early February low to almost 7%.

This put the FTSE on track for weekly gains of around 2.5%, its steepest weekly rise since December. "The market is reasserting its strength, and I am inclined to follow it," said Valerie Gastaldy, head of technical analysis firm Day-By-Day, adding that the FTSE should soon be heading to its all-time high of around 6,950 points.

State-owned lender Royal Bank of Scotland also rose as analysts welcomed reports that the bank will cut its staff by up to a quarter, which could help lower RBS' costs. "The government sell-off of Royal Bank feels a little way off but if this is as radical as we think it's going to be, then I think it'll help in that process," said Numis analyst Mike Trippitt.

Shares in housebuilder Persimmon also rose 1.7%, as JP Morgan analysts tipped the sector to continue to benefit from a pick-up in the UK housebuilding industry.


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