Public transport firm Stagecoach has said trading since October had been at the top end of expectations with revenues up across its main divisions.

The UK rail arm, which includes commuter service South West Trains, saw like-for-like revenues rise 14% while joint venture Virgin Rail posted a 12.4% gain. The company's bus division and American venture also increased income.

Stagecoach shares opened 3% higher as it added that the resolution of historic tax matters will lead to exceptional post-tax gains of £105 million.

Despite the strong figures, the company said growth levels in UK bus and rail were below the rates seen earlier in the year. It said this was expected and reflected the timing of concessionary bus fare schemes and the effect of revenue-enhancing initiatives in the prior year period.

Today's update soothed the nerves of investors after shares in rival Go-Ahead fell heavily earlier this month, amid fears over a slowing economy.

Stagecoach said: "We are encouraged with the current trading performance of the group and, whilst we remain mindful of macroeconomic developments and of continuing cost pressures such as increased fuel prices, the outlook remains positive."

The group recently started its new 10-year South Western rail franchise, which includes the running of around 1,600 trains a day in south-east England out of London Waterloo.

It has boosted revenues with the deployment of 100 additional ticket officers and new vending machines. However, the competitive bidding environment for new franchises has knocked margins and Stagecoach recently said half-year rail operating profits declined to £25.3 million from £31.4 million.

The group has also warned that the subsidy it receives from the Department of Transport will reduce by more than £100 million over the next two financial years, resulting in some variability in profits.

It recently took on the East Midlands rail franchise, with services running to London St Pancras and around the regional network. Stagecoach said revenues for the operation between November 11 and February 3 were 8.1% higher than the previous year.