Shares in Imperial Brands hit their highest level for more than five years as the tobacco giant behind the likes of Golden Virginia and Lambert & Butler cashed in on booming demand for vapes, writes Hugo Duncan.

The FTSE100 group saw sales of so-called next generation products (NGPs) – including vapes, heated tobacco products and oral nicotine pouches – jump 26pc in the 12 months to September.

By contrast, tobacco volumes were down 4pc, though this was offset by price hikes.

Overall sales in the UK were broadly flat, down just 0.2pc to £32.4bn, and the 4.5pc rise in profits to £3.55bn was better-than-expected in the City.

A 4.5pc increase in the dividend to 153.42p a share also lifted the mood.

Shares rose 3.1pc, or 74p, to 2475p, the highest level since April 2019.

The company, known in the City as Imps, has expanded aggressively into new areas such as vapes with e-cigarette brand Blu among its next generation products.

But it still makes the bulk of its sales from traditional cigarettes, including its John Player Special, Davidoff, Gauloises and Winston brands, and the NGP business clocked up annual losses of £79m.

Imps also owns Rizla rolling paper and Backwoods cigars.

Derren Nathan, head of equity research at broker Hargreaves Lansdown, said next generation products are “starting to become more meaningful” for Imps but added that “for now it’s still a loss-making activity”.

The FTSE 100 lost 0.13pc, or 10.3 points, to 8099.02 and the FTSE 250 increased 0.16pc, or 32.21 points, to 20,427.62 as concerns about an escalation in the war between Russia and Ukraine rattled global markets.

In Europe, the stock market in Frankfurt fell 0.7pc, Paris also dipped 0.7pc and Milan slid 1.3pc.

Benchmarks were also lower in New York with the Dow Jones Industrial Average off 0.3pc.

Back in London, British Airways owner IAG fell 2pc, or 4.9p, to 239.7p after another IT meltdown forced it to cancel flights.

Telecoms giant BT Group rose 3.5pc, or 5.05p, to 149.8p after India’s Bharti Global became its largest shareholder with the completion of its acquisition of a 24.5pc stake from telecoms tycoon Patrick Drahi’s Altice.

Technical products and services provider Diploma was the biggest blue-chip faller.

The company, which distributes everything from wire and cabling to seals and medical devices for surgeries, posted a 14pc rise in annual revenues to £1.36bn and a 20pc rise in profits to £285.

But this missed City expectations and shares slumped 8pc, or 362p, to 4174p.

Big Yellow Group was also on the slide, down 4.9pc, or 56p, to 1098p, even after the self-storage firm posted a 3pc rise in half-year revenues to £103m and a 22pc jump in profits to £145.8m.

Peel Hunt analysts did not help, cutting their target price on the stock to 1250p from 1275p.

On a good day for old-fashioned engineers, Bodycote rose 8pc, or 46p, to 621p after the metal treatment specialist reported a 1pc rise in revenues to £643m in the first ten months of the year.