SHARES in VT Group rose after the Hampshire based shipbuilding and services company landed a £30m contract to build a helicopter-carrying offshore patrol vessel for the Royal Navy.

The group said the deal would create 100 jobs and safeguard up to 400 more at its warship factory in Portsmouth.

Many of its workers commute from Southampton, as VT's former shipyard was based at Woolston.

The ship, which will replace the Royal Navy's existing Castle Class vessels, will be used to police the waters around the Falkland Islands.

Production of the 80-metre vessel will start in June. The ship will be handed over to the Royal Navy in autumn 2006 and is due to enter service in spring 2007.

The deal was awarded by the Ministry of Defence and is via a public-private partnership agreement.

VT Group will also have the contract to ensure that the ship is available for duty 300 days a year.

The group employs more than 10,000 people, with its headquarters based at Hedge End, near Southampton.

Shares were up 3.5p at 312p.

In another development, work has begun in Portsmouth by VT on the third of the Royal Navy's Type-45 destroyers, HMS Diamond.

VT is building the bows, funnels and masts for six same-class warships.

Defence procurement minister Lord Back officially started production on Friday.