Invensys and BA bow out of FTSE 100 index

Four new companies are to join the FTSE 100 index of the UK's leading shares at the end of next week, it will be announced today.

The quarterly reshuffle will elevate an investment trust, a water company, a consumer loans specialist and a crisis-ridden telecoms group to blue chip status. And it will demote four of the best-known names in corporate Britain to the relative obscurity of the mid-cap index.

Kelda, the utility group which owns Yorkshire Water, headlines the list of newcomers, having risen 6 per cent since the last reshuffle in December, against a stock market down 12 per cent. At the close of trading last night, Kelda was the 80th biggest UK company by market value.

The Foreign & Colonial Investment Trust is returning to the top flight after a seven-year absence even though its shares have fallen to their lowest level since 1997. The £1.4bn trust, managed by Jeremy Tigue, invests in international blue chips and outperformed global equity markets last year by switching assets from Japan and continental Europe to the UK and US. Its biggest holdings are Shell, Vodafone and GlaxoSmithKline.

Cable & Wireless is also returning to the FTSE 100 after an abortive bid from Pacific Century CyberWorks boosted its beleaguered share price. The chairman, Richard Lapthorne, has promised a radical restructuring after disastrous results from its international telecoms business.

The fourth newcomer is Provident Financial, whose shares have risen on the back of a boom in consumer credit. The company, which lends at high interest to low-income customers considered a bad credit risk by the major banks, has been expanding its operations.

The changes to the FTSE 100 index, to be announced by FTSE this afternoon, are calculated on the basis of market capitalisations at last night's close. As expected, the four companies facing relegation are Rolls-Royce, whose pension fund deficit has frightened investors; British Airways, which is likely to suffer a downturn in passenger numbers if there is a war in the Gulf; Royal & SunAlliance, which has been engulfed by the crisis in the sector; and the industrial conglomerate Invensys, which issued a disastrous profit warning on Valentine's Day.