FTSE hits four-and-a-half-year high

Strong results from some of Europe’s heavyweight companes ensured the FTSE 100 Index surged back to a four-and-a-half-year high today.

Zurich Financial Services and Guinness drinks giant Diageo were among stocks to boost morale as the Footsie cast aside recent uncertainty to close 37.4 points higher at 5828.9 – the highest level since the summer of 2001.

Vodafone registered the biggest gain of the session – up almost 4% – as rumours swept the market of a boardroom reshuffle at the mobile phone giant. Shares rose 4.5p to 124.5p, even though the speculation was denied.

Takeover talk also focused the minds of investors after companies including Xstrata, Cadbury Schweppes and BAA drew bid speculation.

In a week of sluggish mining stocks, Xstrata rose 24p to 1645p after analysts at Macquarie called the firm a realistic target for BHP Billiton.

And Cadbury – best known for its Dairy Milk chocolate bars and fizzy drinks - saw its share price lift 8.5p to 573p as Nestle and Kraft were named by traders as potential suitors eyeing up a takeover.

A confirmed takeover targt, BAA, saw its value rise 14.5p to 825p as the stock edged nearer to the 900p mentioned by shareholders as an acceptable price from potential bidder Ferrovial.

Elsewhere, there was a positive reception to half-year results from drinks giant Diageo, with the company behind Guinness and Smirnoff vodka seeing its shares lift 13.5p to 868.5p following a 7% rise in operating profits.

Better-than-expected annual results from Zurich Financial Services also lifted insurers in the UK, with Prudential up 4.5p to 605p, Aviva ahead 10p at 760p and Legal & General 2.75p higher at 126.75p.

Other results today were treated less favourably as B&Q owner Kingfisher and publisher Reed Elsevier both slipped in the wake of updates.

Kingfisher dipped 1.75p to 226p after the weak DIY market left UK like-for-like sales 9% lower in the fourth quarter of its financial year.

And Reed Elsevier suffered from the poor performance of its educational business, which held back profits growth to 9% in 2005. Shares were at the top of the Footsie fallers board following a drop of 28.5p to 525.5p.

Buy-to-let lender Bradford & Bingley hit the top end of expectations with its full-year results and is also optimistic about prospects for the year ahead, but after a strong start shares fell back from an early 6.5p rise to be down by 1.5p at 448.75p later in the session.

A company with a licence to print money was the biggest climber in the FTSE 250 Index.

The Hampshire-based banknote producer De La Rue saw its shares rise 10% – up 46.25p to 519p – on the back of news that annual profits would be significantly ahead of expectations thanks to a series of large orders.

The biggest Footsie risers were Vodafone up 4.5p at 124.5p, Man Group ahead 72p at 2199p, Kazakhmys up 27p at 864p and Rolls-Royce ahead 12.5p at 454.5p.

The biggest fallers were Reed Elsevier down 28.5p at 525.5p, ITV off 2.25p at 114.75p, Tate & Lyle down 10p at 586.5p and Yell Group off 7.75p at 555.75p.