Miners lead FTSE lower as broker note lifts Babcock

OUTSOURCER Babcock International climbed higher on a retreating market after broker RBC Capital Markets decided that the FTSE 100 company has been wrongly tarred with the same brush as other outsourcing strugglers.

The FTSE 100 company, which specialises in defence outsourcing, has suffered from a “guilty-by-association” view, said RBC, which initiated coverage with an “outperform” rating. Other outsourcers such as

Mitie and Carillion have fallen on hard times, with the former cutting its dividend last month to aid its turnaround, and the latter’s share price tanking by more than 70pc in a matter of days on a profit warning. Babcock, meanwhile, has bucked the trend with a focus on long-term defence contracts with such clients as the Royal Navy cited as the reason behind its progress.

Analyst Andrew Gibb noted that investors have ignored the depth of Babcock’s relationships with key clients and the technical capabilities that help it stand out from the outsourcing crowd. Shares jumped 14.5p to 860.5p, while Carillion edged up 0.45p at 53.7p and Mitie slipped 3.7p to 264.4p.

The wider FTSE 100 index reversed Tuesday’s earnings-related highs, closing 12.23 points lower at 7,411.43, with a less impressive batch of results stopping UK equities from replicating the swagger of the Dow Jones as it climbed to new heights in New York.

Despite stepping up its share buyback programme and issuing a record interim dividend, Rio Tinto dragged on the blue-chip index, dipping 99p to £34.03, as investors focused on a weaker-than-expected core profits number from the miner. Peers Glencore and BHP Billiton slid in sympathy, by 4p to 332.4p and 14.5p to £13.48, respectively.

Standard Chartered

dived 51.2p to 795p as disappointed investors punished the emerging markets-focused bank for failing to return to the dividend list. BAE Systems pared early gains to close 16.5p down at 590.5p following the engineer’s earnings, while increasing confidence in the oil market, after another drop in US stocks, pushed up the price of Brent crude and oil major

Royal Dutch Shell 25p to £21.85 as a result.

On the FTSE 250,

William Hill rose 15.4p to 268p, despite a fall in first-half pre-tax profits. Upgrading the mid-cap bookie from “hold” to “upgrade”, Ivor Jones, a Peel Hunt analyst, said that even with a tougher regulatory environment on the horizon the results showed building momentum.

Finally, Auto Trader slumped 18.2p to 364.8p after JP Morgan downgraded the car classifieds site to “underweight”.