FTSE hits 30-month high

The FTSE 100 Index showed no signs of losing its recent strength today as takeover speculation drove it to a new two-and-a-half year high.

Drinks group Allied Domecq was in the spotlight on the back of media reports that it was the top target of French group Pernod Ricard, finishing the session 5% higher.

Good news was also forthcoming from British Airways and early trading on Wall Street, helping the FTSE 100 Index to close 33.2 points higher at 4941.5.

American investors shook off weaker-than-expected jobs data to focus instead on comments made by US Federal Reserve chairman Dr Alan Greenspan.

Dr Greenspan said a weaker US dollar and greater fiscal discipline were set to play a part in narrowing the massive current account deficit across the Atlantic.

By the close of play in London, the Dow Jones Industrial Average was 35 points ahead at 10,628 and performing better than expected by analysts.

In London, Allied Domecq lifted 22.5p to 514.5p despite analysts playing down reports that Pernod Ricard was preparing for a takeover campaign. They said a tie-up would create a stronger competitor to Diageo, which fell 0.5p to 735.5p, but was likely to come under scrutiny from regulators.

Shares in BA gained height after the airline raised its full-year revenue guidance despite a 40% fall in third-quarter profits.

The airline said it expected a 3% to 3.5% improvement in total revenues for the year to March 31, giving it a prominent position on the risers board with a hike of 4p to 274.5p.

Oil giant Shell clawed back some of yesterday’s losses prompted by its latest reserves downgrade. The stock lifted 12.75p to 484.5p, while rival BP added 4p to 538p.

Biggest risers were Allied Domecq, up 22.5p at 514.5p, Corus Group ahead 2p to 57.5p, Exel up 26p to 850p and Shell ahead 12.75p to 484.5p.

Largest fallers were Tesco down 5p at 311.25p, British Land off 12.5p to 869p, BHP Billiton down 9.5p to 663p and Yell Group off 6.5p to 459.5p.