Orange squeezes energy out of FTSE rebound

The chances of London's equity market building on its recent good showing were severely dented for much of yesterday by news of the price range at which shares in Orange, the mobile phones group, would be floated by France Telecom next month.

But a sustained good performance by the oil majors, BP and Shell, and a late strong run by the banks, led by a resurgent Standard Chartered, provided sufficient momentum to drive the FTSE 100 back into positive territory at the close.

Earlier in the day the drag of the telecoms stocks saw the index slide below the 6,200 level to reach a session low of 6,162.9. At its best, just before the closing auction, the index was up 43.0 at 6,252.3.

It was much more of a struggle for the other FTSE indices, however, with a couple of profit warnings, issued by Iceland, the frozen food retail specialist, and Ashtead, the plant hire group, depressing the 250 index, which eventually closed 10.5 down at 6,701.4.

The FTSE SmallCap moved up 8.9 to 3,299.9, while the Techmark 100, obviously influenced by the tech/telecoms weakness, lost 12.99 to 2,774.66.

The Orange price range, £55 billion to £65 billion, compares with the £100 billion to £150 billion figure predicted by France Telecom in May when it bought Orange from Vodafone and combined it with its own mobile interests. That news unsettled London's telecom stocks, although they rallied towards the close.

Vodafone, the UK's biggest company measured by market capitalisation, was also affected by a price target downgrade instigated by Goldman Sachs. And adding to the downside pressure in the TMT areas of the market, which have mostly been responsible for pushing the Footsie's recent rally, was news of an earnings warning from Dell Computers of the US.

Outside of TMTs, however, it was mostly a quiet session in London as the market made its accustomed subdued start to the week. Dealers said the prospects of interest rate cuts in the US and the UK in the short term were helping to underpin sentiment, as was the expectation of further merger and acquisition activity.

The US Federal Reserve's open market committee meets on January 30th-31st to determine US rates, while the Bank of England's monetary policy committee meets on February 7th-8th.

Domestic economic news this week includes the minutes of the January meeting of the monetary policy committee, the Confederation of British Industry's quarterly survey of industrial trends and the preliminary estimate of fourth-quarter gross domestic product.

Turnover in equities remained robust, reaching 2.1 billion by the 6 p.m. count.