FTSE 100 hits six-year high on end to BAE investigation

The controversial end to an investigation into BAE Systems drove London shares to levels not seen since the end of the dot.com boom. The FTSE 100 index of leading companies closed at 6,260 - 32 points higher on the day, a new high for the year and its highest level since February 2001.

Strong corporate newsflow, a weaker oil price and takeover activity, some real and some imagined, has driven the FTSE 100 up 4.5 per cent in the last 11 trading sessions. However, the main London index remains some way below its all-time high, 6,950, achieved in September 2001.

Tim Hughes, from the spread betting group IG Index, says the large-cap index is still showing good long-term value but it is in danger of getting ahead of current events. He said: "What is perhaps most important about the oil price is that it has been a very steady fall rather than a sharp correction. However, if the current strong performance carries on the market will begin to look over-bought again very soon."

Elsewhere in London trading, the FTSE 250 closed at another all-time high of 11,086, 36.9 points better. Most of the gains this year in London shares have come in companies with valuations of between £300m and £30bn, with buyouts of companies such as BAA, Corus Group and Gallaher providing most of the gains.

Perhaps more surprisingly, most of the "mega-cap" companies, BP, Shell, Glaxo and HSBC, have significantly under-performed the wider market. While the FTSE 100 has risen 13.8 per cent in the past 12 months, BP, after a dreadful year of production and public relations disasters, is down more than 9 per cent. Glaxo is worth 7.4 per cent less than it was a year ago. Shell has fallen more than 2 per cent; HSBC has risen by the same amount.

Of the companies listed in London with a market capitalisation of more than £30bn, only Vodafone, Barclays and Royal Bank of Scotland have matched the FTSE 100's performance.