British telecoms group Vodafone rises to outperform the benchmarkFTSE 100 index, which traders attribute to a Deutsche Bank upgrade onthe stock and to positive reaction to Vodafone's move to buy Germany's largestcable operator Kabel Deutschland.
Deutsche Bank raises its rating on Vodafone to "buy" from "hold".
Deutsche writes in a research note that it believes Vodafone's 7.7 billioneuro ($10 billion) takeover of Kabel Deutschland will increase the likelihoodthat Vodafone will in turn sell out of its Verizon Wireless joint venture topartner Verizon in order to raise cash and cut debt.
"Our view is that a VZW (Verizon Wireless) deal would be the best option tocrystallise valuation and preserve liquidity as Vodafone continues its Europeanturnaround," write the Deutsche analysts.
Vodafone rises 1.3 percent to 188.82 pence in mid-morning trade, adding themost points to the FTSE 100 which is up by 0.3 percent.
Hartmann Capital trader Basil Petrides also welcomes Vodafone's plannedtakeover of Kabel, arguing it will thwart rival Liberty Global andwill be a cash-generative transaction.
"Vodafone is one that I'll be looking to buy, but I'll wait for the stock tofall back down to the 170 pence area," he adds.
($1 = 0.7691 euros)
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