Investors hung up on Vodafone, with the mobile phone operator falling 6.2p to 121¼p after being hit by fears of new regulations, poor results from European peers and a broker downgrade.

Viviane Reding, the EU’s Telecoms Commissioner, has long been a thorn in the side of the Continent’s mobile groups as she strives to cut bills for consumers and she has enhanced her irritant status with the industry again.

Ms Reding wants to cut mobile termination fees, the sum that operators charge rivals to connect calls on their network, by up to 70 per cent in a move intended to reduce customer bills by €2 billion. However, what is good news for callers will hit operators hard.

Such guidelines come as operators are already suffering amid the recession, with first-quarter results from Telecom Italia showing that the sector is far from resilient to the downturn. The Italian operator said that revenues from its mobile business fell 7.1 per cent in the year’s first quarter, after growth of 3 per cent in the previous quarter. The swing is largely down to the cyclical nature of its prepay business as cash-strapped consumers decide not to top up phones. This is particularly pertinent for Vodafone, 60 per cent of whose mobile customers are on prepay tariffs.

There were also underwhelming results from Deutsche Telekom, the German group that owns T-Mobile.

Elsewhere, Vodafone was hit after JPMorgan downgraded mobile telephone stocks in the US, including Verizon, the company’s partner there.

Overall, the FTSE 100 closed flat, with the market giving up earlier gains at the last minute. In what was perhaps an indication of a lack of substance behind the market’s recent rise, the index that had peaked in the early afternoon at 4,520.82, its first time above 4,500 this year, rapidly lost steam when Wall Street opened in the red and closed only 2.19 points higher at 4,398.68.

Lloyds Banking Group was the biggest faller, down 16.2p to 97p, after it warned that impairment charges would be 50 per cent higher this year than last, triggering fears that its outline deal to take part in the Government’s asset protection scheme may have to be renegotiated. Royal Bank of Scotland, which issues a trading update today, fell 4.1p to 41.6p. Elsewhere in banking, Barclays closed down 12¼p at 275¾p, surrendering earlier gains after its own update.

Old Mutual, up 2.9p to 70p, helped to keep an insurance sector rally going by revealing that its regulatory capital cushion had risen in the quarter from £700 million to £900 million. That helped to ease capital solvency fears for Legal & General, the day’s biggest riser, up 6½p to 71.9p.

Traders also reported a sudden rush to buy property developers amid hope that property prices had finally bottomed out. Liberty International jumped 24¾p to 439¾p and British Land rose 13¼p to 483p.

Miners were cheered by a bullish note from Barclays Capital. BarCap said that, having visited China last week and seeing recent economic data, it was convinced that Chinese demand for raw materials was recovering. Kazakhmys rose 53p to 715½p.

— New York: US stocks slipped after a government bond auction drew a poor response and investors worried that the rising cost of capital may hinder the economy’s recovery. The Dow Jones industrial average closed 102.43 points lower at 8,409.85.

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