FTSE 100 newcomer Carphone Warehouse caught traders' eyes on Wednesday after news of a wholesale partnership with Vodafone boosted sentiment about relations between the two.
Europe's biggest independent mobile phone retailer has entered into a deal with Vodafone to power its Talk Mobile service, prompting a flurry of interest in Carphone's shares. For many in the market, the deal provided reassuring signs that the retailer and mobile phone operator are back on good terms after Vodafone's decision a year ago to pull its contract business out of Carphone's stores in favour of Phones4U.
In an upbeat research note analysts at Collins Stewart reiterated a "buy" recommendation on Carphone.
"It is evidence that the relationship between Carphone Warehouse and Vodafone is far from broken, and could heighten speculation that the contract to sell Vodafone subscriptions in the UK could return to Carphone Warehouse from Phones4U," said analyst Mark James.
Carphone Warehouse shares closed up 6p, or 1.8%, at 336.25p, outperforming the wider FTSE 100 which ended the day down 32 points, or 0.5%, at 6,482 exactly.
The index had another up-and-down session, bobbing around the unchanged mark for much of the morning before picking up later on and then diving into the red following weak US housing market data.
Reflecting turbulence in the sub-prime mortgage and credit markets, US sales of previously owned homes fell 8% last month to a record low pace, according to the National Association of Realtors. That news knocked the Dow Jones index during Wall Street's early trading hours and sent fresh jitters around the world.
Still, the FTSE 100's losses were modest by the standards of recent sell-offs.
One the main providers of support for the London index was heavyweight stock BAE Systems. The defence company jumped to a nine-year high thanks to strong earnings news from its industry peer group. After the US company General Dynamics posted a 25% jump in quarterly earnings BAE added 16.5p, or 3.4%, to 507p. The European defence company was also buoyed by strong results from Boeing and Lockheed Martin. Rolls Royce was also one of the day's top performers, up 13p, or 2.4%, at 546p.
Back to US data and news that oil stocks unexpectedly fell last week boosted crude prices and spilled over into the FTSE's big oil companies. Royal Dutch Shell rose 28p, or 1.4%, to £20.46 and Tullow Oil added 12.5p, or 2.1%, to 610p, helped by a price target lift to 700p from Citigroup.
Moving to the midcaps, Cairn Energy continued to soar in the wake of yesterday's talk of bid interest from bigger rival BP. Having added 158p in the previous session, the shares were up another 144p to £24.13, the highest since May last year. BP slipped 0.5p to 611.5p.
In the retail sector caution over Christmas was cast aside and Home Retail Group's shares were among the day's top performers following forecast-beating profits.
The owner of Argos and Homebase was up 6p, or 1.6%, to 393p after reporting a 40% leap in pre-tax profits for the first half, driven by growth at Argos. It said, however, that margin growth could be slower in the second-half because of price cuts ahead of Christmas.
Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers said the results presented very much "a story of two halves", with Argos enjoying continued sales growth whilst Homebase is being squeezed ever tighter on cost and operational efficiencies.
But he added: "Despite management concerns regarding the UK consumer, a deteriorating outlook may play into the company's hands as consumers look to save costs by shopping online."
Mining company Kazakhmys was headed in the other direction, the day's biggest loser after it revealed its production would be hit by setbacks at several sites. The shares were down 108p, or 7.3%, at £13.77 reflecting news from the miner that third quarter production had fallen back.
Cillit Bang maker Reckitt Benckiser was right behind it on the losers board, after it reported no improvement in margins in the third quarter. That overshadowed news of a 14% jump in profits from the world's biggest household goods maker and the shares slipped 140p, or 4.9%, to £27.28.
Moving to the financial sector, there was more movement following the latest news from the Resolution and Friends Provident merger attempt. After the two insurers promised to return around £2bn over the next two years, shares in Resolution shares dipped 11.5p to 706.5p and Friends Provident edged up 2.4p to 175.5p. Standard Life, also expected to pitch in with an offer for Resolution, edged up 1p to 279.75p.
On junior market Aim, broker Daniel Stewart Securities jumped 2.5p, or 22.7%, to 13.5p after it reported more progress in its turnaround plan despite the summer's turmoil in financial markets. Chief executive Peter Shea flagged up a "solid start to the second half of the year".
"Demand from clients for our services has remained strong. We have won a number of new mandates including several IPO's proposed for the second half of the year," he said.
Finally, Software Radio Technology, the developer of digital wireless communications, rose 1.75p to 48.5p on news of a $60m contract win by its Korean manufacturing partner which will pay the Aim-listed company up to $3m in royalties.