Capita, BHP help FTSE tick up after strong updates

Wed Jul 23, 2014 6:58am EDT

* FTSE 100 index up 0.4 pct

* Strong figures from Capita, BHP Billiton brighten mood

* Middle East, Ukraine tension keep gains in check

By Francesco Canepa

LONDON, July 23 (Reuters) - Strong figures from outsourcing group Capita and miner BHP Billiton helped Britain's top share index tick higher on Wednesday, although political tension in the Middle East and Ukraine kept gains in check.

Capita, which runs services from the Ministry of Defence pension scheme to police radio systems, rose 3.6 percent to the top of the FTSE 100 after posting an 11 percent rise in first-half organic revenue.

While Capita has benefited from scandals over the private provision of public services which damaged rivals G4S and Serco, the group's strong results also reflect central and local government and private sector companies outsourcing work to cut costs in the face of tighter budgets.

"Some of Capita's peers have struggled with reputational challenges with the UK government so the business has been a partial beneficiary from that," David Brockton, an analyst at Liberum, said.

"More specifically, Capita's improved growth is also ... a function of recovering levels of spend in some of the areas that suffered through the downturn."

Volume on the stock was already 12 percent higher than its full-day average for the past three months, compared with volume of less than a quarter of the average for the FTSE 100 as a whole.

The FTSE was up 23.56 points, or 0.4 percent, at 6,818.90 points by 1027 GMT, advancing for a second straight day.

Mining shares added 4 points to the index after BHP Billiton beat its own guidance for full-year iron ore output and seeing productivity gains across a number of businesses.

Some investors, however, were steering clear of large direction bets on the index due to political concerns, with the EU raising the prospect of restricting Russian access to European capital markets, defence and energy technology, and due to the conflict in Gaza.

"Geopolitical tensions are preventing a better market development in Europe. Markets will be dominated by consolidation moves due to the uncertainty, combined with high valuations," UniCredit strategist Christian Stocker said.

On the downside, the world's biggest producer of automotive catalytic converters Johnson Matthey fell 3 percent after saying its first quarter underlying operating profit fell by 11 percent. (Additional reporting by Atul Prakash; Editing by Alison Williams)