* FTSE 100 index up 0.1 pct
* GSK's profit warning erases FTSE gains
* Strong figures from Capita, BHP Billiton keep index afloat
By Francesco Canepa
LONDON, July 23 A profit warning by heavyweight
drugs firm GlaxoSmithKline took the shine of Britain's top
equity index on Wednesday, offsetting gains in outsourcing group
Capita and miner BHP Billiton.
Shares in GSK fell 5 percent, their worst drop since
2008, after the firm cut its 2014 earnings outlook, casting a
shadow on its future payouts to shareholders.
"The share price has come off sharply on the back of weak
quarterly results and forward earnings guidance which is very
uninspiring," said Ketan Patel, of Ecclesiastical Investment
Management, which is a shareholder in GSK.
"There will be concerns over the level of the payout ratio
... and low or no growth in the dividend."
The stock knocked 14 points off the FTSE 100, which
was up 3.75 points, or 0.1 percent, to 6,799.09 points by 1422
GMT. It had traded as high as 6,822.65 points before GSK's
update was published at 1100 GMT.
Johnson Matthey fell 1.2 percent after the world's
biggest producer of automotive catalytic converters posted an
11-percent fall in first-quarter underlying profit and said it
expected a worse-than-expected impact from a stronger British
Bank of England officials discussed this month whether there
was a case for an early rate rise, but were held back in part by
strikingly low wage growth and signs of weakness abroad, minutes
showed on Wednesday.
Helping support the FTSE, Capita rose 4 percent to
the top of the FTSE 100 after the group, which runs
services from the Ministry of Defence pension scheme to police
radio systems, posted an 11 percent rise in first-half organic
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
"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 twice its full-day average
for the past three months, compared with volume of half the
average for the FTSE 100 as a whole.
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.
(Additional reporting by Atul Prakash; Editing by Alison