Market Report: Surprise share buyback scheme moves CWC up

Investors were pleasantly surprised by Cable & Wireless Communications (CWC) yesterday after the telecoms company revealed plans for a share buyback scheme worth as much as $100m. The announcement came as the group also said it was selling its Bermuda operations for $70m, and with both bits of news greeted positively, CWC was pushed up 2.86p to 49.33p to take pole position on the mid-tier index.

Although they said the disposal was welcome, traders added that the positive reaction was attributed mainly to the buyback programme being such a surprise. "No-one saw it coming," said one, who pointed out that it would reassure investors after recent worries over the group's dividend payments.

Analysts were also cheerful, with Investec saying the move "provides evidence of management's belief in the value its shares currently represent". The broker described the sale as "merely the start of a portfolio tidy-up", while Deutsche Bank said it meant "management have shown that they are a seller of assets outside of their strategic focus areas to realise value".

As the latest Bank of England minutes raised fears that interest rates could be raised sooner than expected, and with the situation in Libya still ongoing, the FTSE 100 continued its bad week – in which it has already lost 159.46 points – by shifting back 73.23 to 5,923.53.

As a result, those companies perceived as defensive stocks were finding buyers, with Severn Trent and Imperial Tobacco edging up 2p to 1,460p and 10p to 2,001p respectively.

Also benefiting from risk-adverse investors was Scottish & Southern Energy – which added 2p to 1,212p – although persistent takeover rumours continued to surround it, with the latest vague speculation naming Centrica as a possible bidder. The British Gas-owner, meanwhile, shifted down 3.6p to 335.1p as it agreed a three year liquefied natural gas deal with Qatar.

It was not the only effect the emirate was having on the UK markets, after comments from Qatar's Prime Minister. Speaking at a press conference with David Cameron, Sheikh Hamad bin Jassim bin Jabr al-Thani said that "about any investment in the state or partially state-owned banks, we are very open for any investment in the UK". As a result, Royal Bank of Scotland and Lloyds Banking Group received an early boost, but by the bell had been forced back, down 0.4p to 47.32p and 0.79p to 65.5p respectively.

Barclays also started strongly after a $11bn lawsuit over its acquisition of Lehman Brothers' US operations was thrown out late on Tuesday in New York by Judge James Peck.

His decision that the deal was fair was welcomed by Exane BNP Paribas's Ian Gordon, who said he had "no doubt that the unquantified litigation risk weighed heavily in the minds of many would-be Barclays investors". Yet – as the stock also went ex-dividend – Barclays was not able to maintain its initial gains, and it ended up edging down 2.85p to 319p.

Events in Libya meant oil was still in focus, and investors looking for safety were told to head towards Premier Oil and Soco as analysts from Evolution Securities said that "outperformance in the sector ... should come from companies with existing or growing oil production outside of the Middle East and North Africa region".

They added that both groups "are susceptible to takeovers should the stock market fail to reflect the strategic value of their assets", and Soco advanced 1.1p to 332.4p while Premier stayed steady at 1,965p.

High crude oil prices continued to knock the airlines, with International Consolidated Airlines falling 3.8p to 234.4p and EasyJet retreating 10.5p to 355.5p. The cruise group Carnival declined 115p to 2,645p, as Nomura reduced its price target to 3,450p from 3,800p on the issue of fuel costs.

Meanwhile, positive outlook comments from the Australian company WorleyParsons helped push Amec to the top-tier index's summit as the oil services group climbed 100p to 1,138p.

Back on the mid-tier index, Capital & Counties gained 4.3p to 148.8p after saying it could enter a joint venture over its planned Earls Court project. The property company said several expressions of interest had been made,after reports that it was in talks with a Hong Kong developer.

Gartmore was kept at 103p while Henderson finished 1.9p ahead at 160p as both released their last updates before they merge.

The small-cap accountancy group RSM Tenon lost over 20 per cent of its value, slipping back 11.25p to 42p, after it expressed its caution over trading conditions and reduced its growth forecasts for the full-year.

It was a different story for Dunedin Enterprise, which ended up at its strongest price since June 2009. Driven up 29p to 325p, the investment trust announced its full-year numbers and revealed that its net asset value had risen to £122.9m, a move of more than 22 per cent.