THURSDAY MARKET CLOSE: Rolls-Royce windfall powers market

Engines specialist Rolls-Royce helped to propel the London market higher as investors cheered the group’s plans for a £1 billion windfall, sparked by the £985 million sale of its gas turbines arm to Siemens.

Rolls-Royce revealed plans to return £1 billion to shareholders. Picture: PA

Shares soared 8.1 per cent to 1,092p as it also admitted it had no plans for major acquisitions, ending concerns over a revived interest in Finnish marine engineer Wartsila, which has a market value of about £6.4bn.

Sash Tusa, analyst at Edison, said: “After a half year that has been marked by a considerably higher than usual level of corporate activity and newsflow, we are pleased that the company is responding to the market by returning £1bn to shareholders from the sale of the industrial gas turbines activities to Siemens.”

Rolls also said that it aims to reduce capital spending towards 4 per cent of underlying revenues over the next few years, down from 4.9 per cent in 2013.

The jump in its shares helped the FTSE 100 index end the day 29.55 points higher at 6,808.11.

Vodafone was one of few top-flight fallers after Bank of America Merrill Lynch said the near-term outlook in Europe for the mobile phone operator continued to be difficult. Shares closed down 3.25p, or 1.6 per cent, at 194.85p.

Wealth manager Charles Stanley dipped 3.25p to 420.75p after full-year profits tumbled by a third as “significant cost and investment” offset a 17 per cent rise in revenues to £149m.

Stagecoach drove up 6.3p to 373.8p as its Virgin Rail joint venture secured a new West Coast franchise until March 2017, while rival Go-Ahead surged 4 per cent to 2,263p after it said it expects its Southern, London Midland and Southeastern rail division to deliver profits ahead of previous predictions.