3G auction fears drive market down
Concerns about the third-generation mobile phone licence auction continued to cast a long shadow across UK markets Monday morning, driving megaweight Vodafone AirTouch (quote: VOD) down and dragging the FTSE 100 with it.
The blue-chip index was down 35 points by 1224 GMT, reversing early gains. Vodafone, which accounts for a substantial portion of the index, was down 3.25 percent at 267p. Investors are worried that Vodafone will have serious difficulties because of the price tag for its 3G license, which comes to nearly £6bn.
The techMark 100 index of small high-tech companies was down 3.28 to 3,750p.
Another top mover was ISP Freeserve (quote: FRE) and its parent company, electrical retailer Dixons, both of which rose on the news that Dixons is evaluating its options with regard to its stake in the successful startup. A Sunday paper reported the group has appointed Goldman Sachs to advise on options for the 80 percent stake.
Investors drove the price up on hopes Dixons will sell all or part of its stake. The post-flotation prohibition on selling Freeserve shares ends in July.
Freeserve, Britain's largest ISP, rose 3.81 percent to 422p by midday.
Traders said the markets are still on shaky ground, a situation not helped by a strong pound and worries about a possible interest rate hike in the US. Shares this week would probably respond mainly to earnings announcements, one trader said.
"The UK market continues to suffer from sterling strength and we are seeing earnings downgrades based on that. So the market's weak, and although it looks cheap compared with Europe, we are seeing upgrades there based on euro weakness," said a senior equity salesman at a leading European brokerage.
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