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Weir lifted by strong oil demand

Weir Group has upgraded its profits forecast as it maintained the strong performance that has helped it break into the FTSE 100 Index.

The Glasgow-based manufacturer of pumps and valves for the oil and mining industries said orders increased by 32 per cent year-on-year in the 39 weeks ending 1 October, up from the rate of 24 per cent reported in July.

The company, which employs 9,000 staff and whose customers include BP, BAE Systems and the Ministry of Defence, now expects profits to be ahead of previous expectations. Its last profits forecast in the summer predicted its second half performance to be better than the previous year's £95.6 million - but this has now been upgraded by about £50 million.

The group has benefited from growing demand for crude oil fuelled by the global economic recovery, which helped to boost orders for its pumps used in the extraction, transportation and production of oil.

Despite the stronger than expected forecast for 2010, Weir's shares slumped by 2 per cent today as investors locked in profits after a 400 per cent increase in two years - a performance that caused it to burst into the FTSE 100 in September.

Jeremy Batstone-Carr, an analyst at Charles Stanley stockbrokers, said: "Weir is bucking concerns over the weak economic output driven by its exposure to emerging markets.

"After a performance like Weir's over recent months, it's little surprise that you are going to see some profit taking, but the company should continue to command a premium rating."

Only orders for pumps used in the power production and industrial sector were down, by 7 per cent, caused by a weakening of demand from nuclear power stations in Canada.

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