Serco surges on declaration that outsourcers are on the way back

OUTSOURCER Serco enjoyed its best day of trading in a year after UBS declared that the embattled sector was nearing the end of a hellish five-year restructuring phase.

The broker said that 2018 will be the first year the sector will return to structural growth following recent profit warnings plaguing Serco, Mitie, Capita and Carillion as long-term contracts “over-stretched” outsourcers one by one.

Cherry picking Serco as his star pick of the sector, analyst Rory Mckenzie said that the company had now joined G4S on the “return to ascendancy”, upgrading it to “buy”.

The sector needed to “rebase activities and execute on turnarounds”, UBS said, adding that Serco had now entered the final stage of the painful process to lift it 9.1p to 117.7p, an 8.4pc rise.

UBS told clients that G4S’ recovery had now been sufficiently priced in to send the outsourcer sliding 9.4p to 238.5p.

Elsewhere, French supermarket Carrefour’s

15pc intraday plunge after issuing a profit warning and predicting a tough second half of the year added to fears that London-listed grocers were on the decline.

Tesco suffered most, slipping 1.5p to 180.9p, while rival J Sainsbury pared early losses to dip just 0.2p to 236p. Manufacturing data in China indicating continued robust demand in the Asian powerhouse lifted the FTSE 100’s mining stocks. Iron ore surging on the Chinese steel purchasing managers’ index pushed

Anglo American 38.5p higher to £14.03 while Chile- focused copper miner

Antofagasta jumped 20p to £10.35 after Jefferies upgraded it to its “buy” list. The heavy weighting of the miners on the FTSE 100 meant the miners’ gain was also the index’s, which closed 65.36 points higher at 7,430.62.

Fresh from the announcement that it will soon be relegated to the FTSE 250, beleaguered doorstep lender Provident

Financial tumbled back towards the bottom of the FTSE 100 after receiving a pair of broker downgrades from Jefferies and Canaccord Genuity.

Demoting Provident to its “hold” list, Jefferies analyst Phil Dobbin said that the lender, which slumped 66pc last week following its second profit warning of the summer, had been “woefully optimistic” in targeting £150m plus medium-term pre-tax profit in the troubled home credit division, which sunk its latest results. Provident closed 9p lower at 883p. Meanwhile, its Aim-listed rival Morses

Club climbed 10p to 144p after poaching customers from its struggling peer. The lender said that it had seen a “significant increase in territory builds” in its first half with a 25pc increase in total credit issued to customers.