Vodafone's 450,000 Irish shareholders have been given a much-needed boost after the shares recovered strongly on the London market. Vodafone closed up 11-1/2p sterling on 157-1/2p as telecom stocks rallied after the Federal Reserve's latest cut in US interest rates.

The shares, however, are still well off their 175p level after the sale of Eircell to Vodafone was completed and Eircom shareholders received their Vodafone shares.

But dealers believe Vodafone shares may be in for further gains after it emerged that Dutch group KPN had sold its entire holding of 219.7 million Vodafone shares and that Spanish bank BSCH has no plans to sell its 2.7 per cent stake in the British telecoms group.

The sale of 80 million Vodafone shares in recent weeks by Telia and KPN's sale of 220 million shares have reduced substantially the overhang in the stock. Telia still has 66.5 million shares while other shareholdings seen as overhanging the share price are the 2.7 per cent held by BSCH and 900 million shares held by Hutchison Whampoa.

The key to the short-term future of Vodafone shares is the stake held by BSCH. Yesterday, sources close to BSCH said it had no plans to sell this stake, even though the lock-in period expires today. "It would not make any sense to sell Vodafone at such a low price; it would be considered a mistake," the source said.