Vodafone AirTouch and Mannesmann edged closer to a deal yesterday when the UK mobile phone group suggested it would be willing to give its German counterpart almost 50% equity in the combined group if the deal was recommended, reports the Financial Times.

Vodafone dropped its hint as equity markets digested news of the company's strategic alliance with Vivendi. At the close of trading the spread between the value of Vodafone's hostile bid and Mannesmann's share price had sunk to about 7% - its lowest level since the offer was launched.