ICAP, the world's largest interdealer broker, recorded a 15 per cent surge in revenues during the second quarter due continued volatility on the world's financial markets.

ICAP, founded by well-known City figure Michael Spencer, told investors at the firm's annual meeting today that no let-up in volatility during the three months from April to June meant it was well on course to hit analysts' profits forecasts.

Shares in ICAP rose 3.59 per cent to 432.75p after the company said pre-tax profits for the full year were likely to exceed £375 million.

Mr Spencer, who is Treasurer to the Conservative party and operates his own investment vehicle, IPGL Ltd, said ICAP's favoured markets should continue to grow strongly.

Underlying revenues in ICAP's markets are expected to increase by at least 10 per cent a year, he said.

ICAP's brokers stand between City financial institutions in some of the world's biggest dealing markets, including interest rates, currencies, corporate bonds and credit derivatives.

Mr Spencer said the recent picture in these markets was mixed, slowing in some areas such as emerging markets and credit derivatives, but performing well elsewhere such as corporate bonds and the trading of European interest rates.

ICAP has benefited from the volatility that has gripped markets as dealers have rushed to trade out of riskier positions or sought safe-haven investments through its brokers.

Mr Spencer has also taken the firm into new trading areas such as insurance, energy and shipping in order to cushion it effectively if the markets go against it.

IPGL, which invests in areas as diverse as African hedge funds and mobile phone betting specialists, emerged earlier this week with a stake in F&C Asset Management of more than 2 per cent held through derivatives.

Mr Spencer's vehicle bought £10 million worth of F&C's shares through contracts for difference, which give investors exposure to a company without owing the underlying shares.

IPGL bought 10 million shares valued at £1 apiece. It is likely that the company took its stake during this week's fire sale of the shares by Dawnay, Day, the troubled financial conglomerate.

Dawnay, Day sold its entire 26 per cent stake in F&C through Kaupthing after it was hit with margin calls on its position.

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