ARM Holdings and Apple go way back and on Thursday the market was taking the view their relationship could be about to become even tighter.

Shares in the Cambridge-based chip designer soared to an eight-year high as rumours continued to circulate that Apple may have ARM in its sights as an acquisition target.

But before speculators get too carried away, Arm's chief executive Warren East reminds everyone to look at the economics. With ARM's market capitalisation at more than £3bn why fork out a fortune to own it when Apple and others can license the designs at a fraction of that?

"Exciting though it is to have the share price pushed up by these rumours, common sense tells us that our standard business model is an excellent way for technology companies to gain access to our technology. Nobody has to buy the company," East told the Guardian.

At the root of the rumours, ARM's microchips can be found in most of the world's mobile phones, including Apple's iPhone. As consumer demand for smartphones grow and as the devices get smarter, they will need more of Arm's designs. Having said that, Apple now owns its own chip designer – PA Semi.

The talk left ARM's shares up 8.4p, or 3.4%, to 258.9p, the highest since April 2002 and made them the day's top performers on the FTSE 100.

The bluechip index had a punishing day overall as new worries about Greece's deficit rattled nerves around the world - something that pushed the euro close to a 12-week low against the pound. The FTSE 100 finished down 58.1 points, or 1%, at 5665.3 adding to steep losses made on Wednesday as miners sold off for a second day.

Although the flight ban was over, worries about volcanic ash-related losses continued to weigh on British Airways and it was one of the day's biggest fallers down 8p, or 3.4%, at 225.5p. Assessing the fallout, analysts at ratings agency Fitch commented that Lufthansa and Air France-KLM were likely to have been hit the worst in absolute terms but that BA was the longest affected with a 100% network closure lasting almost six days.

"The industry recovery is at a fragile stage and this significant flight disruption is likely to delay the progress European airlines had made towards improving credit metrics. As the industry remains in a weak financial position, it now cannot afford any further large shocks without jeopardising its creditworthiness," said Fitch's Sabrina Ran.



Looking ahead to next week there was a boost to Unilever from a broker upgrade and as rival food group Nestle posted an upbeat outlook. Analysts at Panmure Gordon expect "good" first quarter results when the soup-to-soap marker reports next Thursday and believe that after trading in the doldrums for some time the shares will soon take off. They raised their recommendation to "buy" from "hold" and increased their price target to £23.00 from £20.00, a vote of confidence that left Unilever shares up 21p, or 1.1%, at £19.61.