A tentative rally in Orange, the mobile phones group whose poor performance after its flotation on Tuesday triggered a wholesale sell off among its peers, injected some much-needed confidence in to the telecoms sector yesterday.
And that was enough to boost a London market which for much of the morning had shown further signs of flagging. At the finish of the trading session, the FTSE 100 just failed to close above the 6,200 level, ending the day a net 21.7 up at 6,197.9, having rallied from a low of 6,155.5 and hit 6,212.7 at best.
And it was a similar story for the other main indices, all of which settled with modest gains on the day. The FTSE 250 picked itself up just before the close, settling 4.3 firmer at 6,751.8, having been down 21.3, while the FTSE SmallCap was up 4.1, recouping an earlier 2.7 fall. The Techmark 100 rose 47.73 to 2,607.76.
The rally in the FTSE 100 was never totally convincing, with dealers warning of the possibility of another telecoms sell-off. The sector is, they say, still suffering from the debilitating effects of a persisting market view that the mobile phones market is running out of momentum.
That, added to the mountainous debt burden affecting the telecoms stocks plus the massive overhang of stock in Vodafone, are powerful arguments for avoiding the telecoms, according to some sector specialists.
The market's initial struggle was not only triggered by the telecoms concerns, but also by Wall Street's rather erratic showing overnight, which saw the Dow Jones Industrial Average plummet over 100 points, while the Nasdaq Composite rose 63 points. A strong upside performance by both the Dow and the Nasdaq at the outset of trading in the US yesterday provided London with an additional fillip.
The day's domestic economic news showed retail sales in January up 0.7 per cent, broadly in line with market expectations, compared with a 0.1 per cent rise in December.
TMT stocks, mostly led by the resurgent telecoms, led the FTSE 100 charge, accounting for no fewer than 16 out of the top 20 winners among the constituents of the UK's benchmark index.
Turnover in equities fell short of recent daily levels, a reflection, dealers said, of the cooling off in activity in telecoms and related stocks.
