SHARES in BAE Systems powered ahead on Monday after the firm escaped a potential earnings blow when the High Court ruled the UK could continue selling arms to Saudi Arabia.
Two judges in London decided the Secretary of State for International Trade had not acted unlawfully or irrationally in refusing to block export licences for the multi-billion sale and transfer of arms and military equipment.
The British defence giant, which generates more than £3 billion of its revenues from business with the Arab nation, rose 12.5p to 630p. The wider FTSE 100 Index climbed 19.11 points to 7,370.03.
Across Europe, Germany's Dax and the Cac 40 in France both closed 0.5 per cent higher.
On the currency markets, the pound was marginally lower against the US dollar at 1.288 and flat versus the euro 1.130.
The greenback continued to strengthen following better-than-expected US non-farm payrolls data on Friday, which showed that 222,000 new positions were created in June.
The oil price endured another choppy session, falling in early trading before swinging to a one per cent rise at $47.19 a barrel.
David Madden, market analyst at CMC Markets UK, said traders have "less faith" in Opec's ability to curb oil production and support prices despite pledging to tackle the global supply glut.
In UK stocks, Carillion's stock price crashed after it warned over its performance and said that the board is to carry out a "comprehensive review" of the business, with the firm's chief executive to step down.
The construction and infrastructure giant downgraded its annual revenue guidance in a half-year trading update, with sales now expected to be between £4.8 billion and £5bn and its overall performance forecast to be "below management's previous expectations".
To compound matters, chief executive Richard Howson is to step down and be replaced by Keith Cochrane on an interim basis while a search is undertaken for a permanent boss.
Following a review carried out by KPMG, the FTSE 250 firm said it will book an £854 million provision linked to certain UK and overseas contracts.
A total of £375m relates to the UK and £470 million to overseas markets in the Middle East and Canada.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Carillion looks like it's trying to bail out a supertanker with a soup spoon.
"Despite the group's best efforts, debt is continuing to climb, and at an increasing rate, while the construction business seems to be hitting one hurdle after another.
"Judging by this announcement, the board are prepared to do everything it takes in order to save the ship. But talk of a review of capital structure, and the ongoing debt problem, will leave investors worried that a significant rights issue could be on the horizon."
Shares in the firm fell 39 per cent, or 75p to 117.1p.
The biggest risers on the FTSE 100 Index were Schroders up 68p to 3,225p, BAE Systems up 12.5p to 630p, BHP Billiton up 21p to 1,263.5p, Anglo American up 17p to 1,068p.
The biggest fallers were Shire down 138p to 4,186.5p, Next down 73p to 3,693p, Provident Financial down 42p to 2,330p, Marks & Spencer down 5.5p to 339p.
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