THE Footsie's last remaining technology firm gave the City a welcome lift after the recent interest rates gloom.

Accountancy software group Sage saw its shares soar as it forecast half-yearly profits ahead of expectations.

The Newcastle company forecast pre-tax profits of about £87m, up 17 per cent on last year.

Sage said revenues in the UK rose seven per cent to about £91m, with an operating margin of about 40 per cent, up from 38 per cent.

The group, which employs about 5,500 people worldwide, including 1,500 staff in the UK, sells software solutions and other services for small to medium-sized enterprises (SMEs).

It gave a trading update ahead of results for the six months to March 31, due to be posted next month.

Revenues in its North America division increased by about 21 per cent at constant exchange rates to about £136m during the period.

This included a contribution of £17m from US-based Timberline, the accounting and business management software business bought by Sage for £56m last September.

In mainland Europe, revenues rose 23 per cent to about £89m, with an operating margin of about 23 per cent.

The rest of the world division, which includes two new acquisitions in South Africa and Asia Pacific, generated revenues of about £16m.

Group revenues are expected to be about £332m, up 23 per cent at constant exchange rates on the previous year.

In its last update in December, Sage posted a 12 per cent rise in annual profits and said it would continue to deliver growth even if economic conditions remained difficult.

The weak economy in the US meant many SMEs had been cautious about spending on software, opting for upgrades and complementary products instead.

Anthony Grezo of stockbrokers Laing & Cruickshank said: "Rightly or wrongly, Sage is seen by the City to be bell-wether (leader) of the tech market so these results have given the market a good feel today."