Footsie surges to four-year highs

Gains by aerospace firm BAE Systems helped fuel a surge in activity on the London market today amid speculation a major order could be on the cards.

BAE led a rally by the FTSE 100 Index on talk that an order for nearly 50 Eurofighter jets from Saudi Arabia was imminent.

It was the highest blue-chip riser on a day when the Footsie surged to levels not seen in more than four years, adding 41.1 points to reach 5589.0 by mid-morning.

Shares were lifted by the news that a Bank of England decision on interest rates this month was not as clear cut as analysts expected.

Hopes of a cut in rates early next year were ignited after it emerged that Stephen Nickell pressed for a reduction this month, boosting shares and sending the pound lower against the US dollar.

BAE Systems added almost 5% or 17p to 364.75p and was joined on the way up by top-flight newcomer Kazakhmys.

Kazakhmys rose 12p to 696p to hit its highest level since floating on the stock market two months ago, while rival miners Rio Tinto and Xstrata ticked 47p and 24p higher to 2611p and 1370p respectively.

Oil heavyweights BP and Royal Dutch Shell also featured among the session’s biggest risers, as the price of a barrel of crude oil moved slightly above 58 US dollars. BP cheered 8p to 628p and Shell added 23p to 1852p.

But stocks going ex-dividend dominated the fallers board, with United Utilities declining 10.5p to 675p after shareholders lost the right to the most recent payout. This issue also led to Land Securities falling 16p to 1620p and Marks & Spencer weakening 2.5p to 486.75p.

Elsewhere, plastic bag maker British Polythene Industries jumped 10% or 44p to 493p after overcoming high energy costs to predict results “materially” in excess of market expectations.