FTSE 100 movers: Capita slumps on Exane downgrade; Carnival bounces back

London's FTSE 100 index was flat at 6,264.09 in afternoon trading as market participants looked ahead to the long weekend.

Royal Mail ended the week on a high. On Wednesday, the postal regulator said it had decided not to impose any new price controls on the company’s wholesale or retail products but it kept the cap on stamp prices and proposed tightening some rules in the 'access' market.

Ofcom said it would closely monitor the company as it was concerned Royal Mail "has the potential to cross-subsidise its parcels business through its letters business – where it has a much larger market share and an established delivery network – in a way that might disadvantage other parcel operators".

Carnival was also on the front foot, having slumped in the previous session as it went ex-dividend.

United Utilities bounced back after falling on Thursday, when it reported a big drop in full-year underlying profits following the introduction of new regulated price controls and because of the expected increase in depreciation and other costs.

On the downside, outsourcer Capita was under the cosh after Exane BNP Paribas downgraded the stock 'underperform' from 'neutral'.

The quality of Capita´s earnings is weak and both on and off-balance sheet liabilities continue to rise, analysts at Exane said.

In particular, analysts George Gregory and Henry Naish took issue with the company’s s accounting treatment for non-underlying software & license amortisation.

“Earnings quality has remained weak and meanwhile both on and off-balance sheet liabilities have continued to rise, pointing to a concerning imbalance," the analysts said.

Dublin-based pharmaceuticals group Shire was weaker after it announced that 93.8% of its shareholders voted in favour of its $32bn merger with US-based Baxalta Inc.

Chief executive Flemming Ornskov said: “We are pleased to take this important step toward completing our combination with Baxalta, and are grateful that our shareholders have voiced their support by approving this transaction.

Shire announced the purchase of Baxalta back in January, saying it would pay $18 in cash and 0.1482 Shire ADS for each of its rival’s shares, implying a price of $45.57 per share of Baxalta, above a previous bid of $45.23.

Risers

Royal Mail (RMG) 531.50p 1.82%
3i Group (III) 551.00p 1.47%
Carnival (CCL) 3,418.00p 1.15%
Burberry Group (BRBY) 1,094.00p 1.11%
Next (NXT) 5,505.00p 1.10%
TUI AG Reg Shs (DI) (TUI) 1,050.00p 1.06%
Royal Bank of Scotland Group (RBS) 251.20p 1.05%
United Utilities Group (UU.) 964.50p 0.99%
Hammerson (HMSO) 585.00p 0.95%
InterContinental Hotels Group (IHG) 2,660.00p 0.83%

Fallers

Capita (CPI) 1,072.00p -2.37%
Anglo American (AAL) 614.40p -2.35%
Antofagasta (ANTO) 437.70p -2.28%
Berkeley Group Holdings (The) (BKG) 3,302.00p -2.16%
Tesco (TSCO) 165.95p -1.57%
Standard Chartered (STAN) 540.80p -1.53%
BHP Billiton (BLT) 841.50p -1.21%
Shire Plc (SHP) 4,301.00p -1.10%
Randgold Resources Ltd. (RRS) 5,795.00p -1.02%
BP (BP.) 360.90p -0.97%