Vodafone’s shares fell almost 4 per cent on Monday as investors reacted to claims that regulators are preparing to take action that would cut the UK mobile group’s European core earnings by 11 per cent.

Analysts at Morgan Stanley downgraded their recommendation on Vodafone’s shares from “buy” to “sell” after concluding that intervention by the European Commission could reduce core profits at Vodafone’s European mobile businesses by £900m ($1.78bn) between 2009 and 2012.