BAE tumbles on jet deal collapse

Shares in BAE Systems have taken a tumble after it failed to clinch a deal to sell Typhoon jets to the United Arab Emirates.

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Shares in BAE Systems fell sharply after the failure of Typhoon negotiations with the United Arab Emirates.

Shares in BAE Systems have taken a tumble after it failed to clinch a deal to sell Typhoon jets to the United Arab Emirates.

The blue-chip stock was more than 4% lower, off 19.9p at 422.1p, in the wake of the announcement late on Thursday, which came despite lobbying by Prime Minister David Cameron on a recent visit to the Middle East.

BAE said it never priced the deal into expectations but investors were spooked as there was also no sign of progress on price negotiations relating to a separate transaction with Saudi Arabia.

The wider FTSE 100 Index ended 21.9 points higher at 6606.6 amid positive economic data in the UK and in the US where growth figures were also upgraded.

It helped Wall Street's Dow Jones Industrial Average push towards new highs.

Meanwhile Germany said borrowing would be lower this year amid an improving picture for Europe's biggest economy, lifting the mood on Frankfurt's Dax and Paris's Cac 40.

In London, the focus of investors turned to the UK economy after the release of a slew of data, including upward revisions to previous GDP figures.

It meant that Britain is now 2% away from its pre-crisis level at the start of 2008, rather than 2.5% as previously thought, adding to hopes that the end of the prolonged economic downturn is close at hand.

However, economists cast doubts about the sustainability of the recovery after Britain's current account deficit with the rest of the world rose to 5.2% of GDP - the highest percentage level for 24 years.

Samuel Tombs, UK economist at consultancy Capital Economics, said: "The economy's growth spurt seems to be exacerbating existing imbalances in the economy, rather than helping them to heal."

On currency markets, sterling was flat at 1.64 US dollars and 1.20 euros.

Cruise ship operator Carnival was one of the biggest risers in the FTSE 100 Index after Thursday's forecast-beating revenue guidance for the first quarter of next year.

Its shares rose 3% or 77p to 2389p, having already posted big gains during the previous session.

Marks & Spencer came under pressure after Cantor Fitzgerald cut its profit forecast by £15 million and reiterated its sell rating on the company, which is reportedly planning to offer savings of up to 30% on clothing on Saturday.

Analyst Freddie George said: "Anecdotal evidence and a view of the daily broadsheets would indicate that there has been an accelerating trend in the level of discounts on offer in M&S and that the company is behind on its sales target ahead of Christmas."

However some investors saw value in the stock after recent volatility, with M&S improving 0.8p to 445p.

The biggest FTSE 100 risers were Vedanta Resources, up 41.5p to 848.5p, Carnival up 77p to 2389p, Coca-Cola HBC up 49p to 1728p and Tesco up 8.4p to 332.2p.

The biggest FTSE 100 fallers were BAE Systems down 19.9p to 422.1p, Severn Trent down 30p to 1661p, Anglo American down 22p to 1261p, and William Hill down 6.7p to 384.5p.