The FTSE 100 Index powered to its highest level for nearly six years today as investors welcomed the end of an investigation into an arms deal between BAE Systems and Saudi Arabia.
The Footsie was up 32 points to 6260 – above last month’s peak of 6254 and the highest it has been since February 2001.
BAE was joined on the leaderboard by banking and oil stocks, which added a large chunk of the day’s upside as shares in New York also started the session in positive territory.
With US crude costing around 63 US dollars a barrel, BP was up 3p to 580p and Royal Dutch Shell was ahead 16p at 1837p.
Banks benefited from the recent positive run of trading statements as Alliance & Leicester lifted 38p to 1156p and Royal Bank of Scotland rose 19p to 1999p.
Among insurers, Prudential rose by 2%, or 15p to 710.5p and Standard Life added 7p to 296.5p.
Marks & Spencer was up 2.5p to another record high of 709.5p as investors banked on it having a good Christmas.
The biggest riser was BAE – up nearly 7% – after the Government ended a probe by the Serious Fraud Office into a “slush fund” allegedly used by the firm to secure contracts with Saudi Arabia.
It was feared the Saudis would pull out of a massive deal to buy 72 Eurofighter jets – built by BAE in Lancashire – as a result of the investigation.
Shares in BAE have fallen by as much as 10% in the last month but were up 27.25p to 424.5p today.
Shares in Gallaher were up 3.5p 1158.5p after the tobacco company agreed a takeover at 1140p a share, or £7.5 billion. The current price suggested traders believed the UK’s fifth largest tobacco company could attract another offer to rival the existing deal with Japan Tobacco.
British Gas owner Centrica failed to make progress as investors digested a number of strands to an end of year trading statement. The group said it would take out 1,300 jobs as part of a major cost-cutting exercise, while its residential business will return to profit in the second half of the year.
However, with almost one million customers leaving the business this year, shares were down 2.75p at 340.5p.
And steelmaker Corus was down 6p to 531p after it was ordered to pay £3 million for breaching health and safety laws at a factory where an explosion killed three workers.
Elsewhere, Misys was off a penny to 214.5p after a disappointing trading update showed worse than expected results in its healthcare unit.
Sports website firm 365 Media Group gained more than 5% or 3.5p to 67.5p after it agreed to be taken over by satellite broadcaster BSkyB. BSkyB shares fell 7p to 520p, while ITV, in which Sky recently bought a stake, fell 2.25p to 109.75p.
The day’s biggest blue chip risers were BAE up 27.25p to 424.5p, British Energy up 26.5p to 539p, Alliance & Leicester 38p better off at 1156p and BT 10p stronger at 315p.
The heaviest fallers were ITV down 2.25p to 109.75p, Cairn Energy off 32p to 1914p, Vedanta 20p lower at 1245p and International Power down 6p to 389.25p.