CARPHONE WAREHOUSE bounced back from recent selling on the view that the 26 per cent fall in the retailer’s shares since May has been too severe.

The £2.5 billion company, which sits on the verge of the FTSE 100, has been hurt by concerns of customer-handling problems stemming from its aggressive broadband promotion and worries that telecoms carriers are increasingly looking to cut out retailers. But Panmure Gordon points out that first-quarter figures showed a healthy 34.8 per cent rise in connections, while local loop unbundling appears to be running ahead of schedule.

Although the broker concedes that costs associated with Carphone’s broadband launch makes its shares look expensive in the near term, it believes that profit forecasts could rise and advises clients to buy while the company is “unloved”. Carphone rose 9¼p to 286¾p, with the FTSE 250 up 58.5 to 9,785.6.

Talk of corporate activity involving Stagecoach sent the bus and train operator up 3½p to 126½ on brisk turnover in 19 million shares.

Foseco, which supplies the steel industry, added ½p to 177½p, as Cinven, a pre-float backer, offloaded a further 17.8 million shares through Collins Stewart at 175p after Thursday’s interims, trimming its stake from 21 per cent to 10.4 per cent. Although that disposal removed a stock overhang, recent hopes of a bid for Foseco were delivered a blow by the overnight disclosure that Ashland, of the US, a potential predator, is returning its $1.1 billion war chest to shareholders.

Aveva Group, which underwent a three-for-one share split in July, surged 124¾p to 506p as the developer of computer-aided design software for the marine and energy sectors said that full-year figures would beat forecasts, citing unprecedented demand for its products. ABN Amro responded by raising its current-year pre-tax profit forecast by 47 per cent.

Interactive Prospect Targeting, the acquisitive online direct-marketing specialist, firmed 2½p to 200p on filing above-forecast interims. Computer Software Group rose 1½p to 112½p as Seymour Pierce raised its earnings forecasts by 6 per cent and its price target to 150p. Avingtrans added 1¼p at 138½p on the acquisition for up to £10.5 million of B&D Patterns, which makes jet engine components. Alexander Mining held steady at 22¼p, despite an upbeat update on its flagship León project in Argentina.

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