Outsourcing firms help Britain's FTSE steady at 13-year high

Tue May 21, 2013 4:25am EDT

* FTSE 100 up 0.1 pct to 6,764.27 points

* Capita rises 6.3 as contract win boosts earnings prospects

* Carnival down 13.7 percent as cuts outlook

By Francesco Canepa

LONDON, May 21 (Reuters) - Britain's benchmark share index steadied at near-13-year highs early on Tuesday, as rallies in outsourcing companies Capita and G4S offset a sharp fall in cruise operator Carnival Corporation.

Capita rose 6.3 percent to an all-time high and topped the FTSE 100 after the group secured a 10-year deal worth around 1.2 billion pounds ($1.83 billion), allowing it to raise its outlook.

"Capita is now clearly going to deliver strong organic growth through 2013," Espirito Santo's analysts said in a note.

Fellow outsourcer G4S rose 1.2 percent after saying its chief executive Nick Buckles, under whose stewardship the group suffered a series of setbacks and issued a profit warning, will step down.

Retailers Burberry and Marks & Spencer rose 1.7 percent and 2.6 percent respectively after reporting estimate-beating results.

They helped the FTSE 100 add 8.8 points, or 0.1 percent, to 6,764.27 points, its highest since September 2000, at 0804 GMT.

Gains were curbed by a 13.7 percent fall in Carnival, which slashed its revenue outlook after lowering prices to lure customers following a series of major incidents.

One of its ships capsized off the Italian coast last year and in February another was adrift for five days in the Gulf of Mexico following an engine fire.

"We had been over-optimistic in our view that Carnival could produce a solid FY13E (full-year 2013) outturn," analysts at Investec said in a note, cutting their target price to 2,550 pence from 2,800 but keeping their "buy" stance on the shares.

The FTSE has rallied 8.5 percent since mid-April as monetary support from central banks allowed investors to discount patchy global economic data and a lacklustre earnings season, which has seen 53 percent of European companies miss expectations so far.

"The disparity between the macroeconomic environment and the central bank-led rally is getting slightly bigger," Dan Reed, head of contract-for difference trading at Beaufort Securities, said.

He was selling the FTSE betting on an intra-day retracement to 6,720, the index's close on Friday, but said dip-buyers could come back and force him to close his negative bets. (Reporting By Francesco Canepa; Editing by John Stonestreet)

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