Market Round Up: CWW and Vodafone cool as Square Mile starts to doubt tie-up

In the immediate wake of last week's announcement that the mobile phone giant was thinking about making an approach for CWW, the corporate telecoms firm's share price shot up 45%.

But since then it has been on the slide, and - according to Espirito Santo's workings - the present share price implies the market believes there is less than a 20% chance of a deal being completed. Running the numbers through their calculators, analysts at the broker worked out that the base case value - right in the middle of best case and worst case - for CWW to Vodafone was £1.81 billion, or 68.12p a share, well north of its current level.

Traders agreed there was a great deal of uncertainty around the deal, saying it was unlikely Vodafone was "totally committed" to the idea. Espirito's analysts also worked out that in the worst case, CWW would only be worth 30.65p a share to Vodafone, although they calculated that the most optimistic value was just over 100p a pop.

However, they added, because of the many risks involved in the deal they believed Vodafone "would not be willing to pay more than around 50p per share", and in response CWW slipped 0.46p to 26.54p. Vodafone dropped 2.95p to 172.9p.

There was more optimism about takeovers among the oil explorers after news that Cove Energy - which shot up 40p, or 26%, to 194.56p - had agreed a 195p-a-share deal with Shell (unchanged at 2304p).

Brokerage Fox Davies Capital said it placed "the whole sector back on take-out watch". Tanzania-focused Ophir Energy - which itself has been the subject of takeover speculation recently - was one of the major risers, jumping 36.5p, or 9.99%, to 402.15p.

The Dow Jones may have broken the 13,000 barrier last night for the first time in nearly four years but the FTSE 100 continued to slide today, easing back another 21.61 points to 5906.59.

Rexam topped the blue-chip leaderboard, climbing 12.6p to 396.95p, as investors cheered the drinks can-maker's decision to put its personal care unit in the shop window.

At the other end, Vedanta Resources tracked back 54p to 1398.5p after having gained 7% yesterday on reports it could be about to tackle its rather complex structure by merging two of its separately listed operations. The India-focused miner has neither confirmed or denied the talk. The loss of its payout attraction left Durex-maker Reckitt Benckiser 77p cheaper at 3501.5p. Carnival (40p down at 1900.5p) and Barclays (off 3.3p at 244.43p) were also trading ex-dividend.

Having been boosted by the revival of vague rumours late yesterday that the world's largest company Apple could be interested in a possible move, ITV eased back 0.65p to 78.88p.

On the FTSE 250, Home Retail was 3p lower at 106.1p after Deutsche Bank downgraded it to a "sell", saying that after the Argos-owner's recent rally there was the chance of "material downside".

In a note on the sector, the broker recommended buying the "quality cyclicals" such as Kingfisher, with the DIY retailer advancing 1.2p to 276.3p.