DEFENCE giant BAE Systems saw its value increase by almost £1billion after a fraud probe which had threatened a £6billion deal with the Saudi govern-ment was dropped.

It had been feared that an investigation by the government's Serious Fraud Office into dealings involving BAE Systems and Saudi Arabia would threaten local jobs.

The Middle Eastern country had threatened to pull out of a deal for 72 Eurofighters to be made by firms including BAE Systems, after they were said to be embarrassed by the probe.

It had been reported that a company in France could have been in the running for the deal instead.

But the probe was dropped on Thursday and BAE Systems, which employs about 4,000 people at its Samlesbury base, saw its shares increase by seven per cent, or about £900million overnight, valuing the firm at £13.65billion.

Today East Lancashire MPs welcomed the move, believed to be a bid to help stabilise the political situation in the Middle East.

Jack Straw, Blackburn MP and Leader of the Commons, said: "I am delighted.

"The decision made by the Attorney General was on national security and evidential grounds.

"It couldn't take into account business interests but jobs in the area would have been seriously at risk had this investigation continued."

Nigel Evans, Ribble Valley MP, said: "It is great news for those people who work at BAE Systems, and a huge number of smaller contractors."

The announcement was made in Parliament by Attorney General Lord Goldsmith, who explained the decision to drop the investigation had been made to "safeguard national and international security" but no weight had been given to commercial interests. But critics, including the Liberal Democrats, said the decision was "outrageous and disgraceful" and the government had effectively blocked a criminal investigation.

A statement issued by BAE Systems it said: "After more than two years of what has been a thorough investigation, we welcome the statement made yesterday by the Attorney General in the House of Lords."

And Chorley MP Lindsay Hoyle said workers were celebrating "an early Christmas present".

He said: "Quite rightly they were happy with the news. Jobs would have gone.

Gordon Prentice, Pendle MP, said: "We want the company to prosper but the way in which the investigation went on for two years with the promise of another 18 months was almost a negation of justice."