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Britain's FTSE edges down from two month high
December 21, 2016 / 10:58 AM / 9 months ago

Britain's FTSE edges down from two month high

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* FTSE 100 down 0.1 pct

* Capita suffers from Goldman downgrade

* CCH up after Coca Cola buys AB InBev Africa bottling stake

* QinetiQ rises after deal for Meggitt defence unit

By Alistair Smout

LONDON, Dec 21 (Reuters) - Britain’s top share index edged lower on Wednesday after reaching a two-month high, influenced by a weaker mining sector and with outsourcer Capita also hit by a downgrade from Goldman Sachs.

By 1008 GMT, the FTSE 100 was down 5.42 points, or 0.1 percent, with materials, including the blue-chip miners, trimming 4.5 points off the index.

The index had touched a fresh two month high in early deals, having posted its highest close since October 11 in the previous session.

Mining stocks were the top sectoral fallers, down 0.7 percent. Rio Tinto was the biggest faller in the sector, down 1.2 percent, as a tropical storm headed towards the Pilbara iron ore belt in Australia.

Top individual faller on the FTSE 100 was Capita, down 1.7 percent after Goldman Sachs cut its target price on the stock to 595p from 771p.

The investment bank said it expected free cash flow to decline around by about 3 percent each year for the next two years following Capita’s recent trading update. Earlier in the month the company gave its second profit warning in three months.

“In general, we see risks that the company’s restructuring plan will not address the major concerns we have about bidding process and increasing cyclicality of the business model,” analysts at Goldman Sachs said in a note, reiterating a “neutral” rating on the stock.

Among risers, Coca-Cola Hellenic (CCH) was up 1.7 percent after Coca-Cola bought a majority stake in an African bottling firm from AB InBev for $3.15 billion.

Coca-Cola said it planned to hold all operations temporarily until they can be refranchised to other partners. Its existing bottling partners include Coca-Cola European Partners and Coca-Cola Hellenic.

Analysts said that CCH was well positioned to secure the bottling rights due to its experience in Africa, and that the deal looked like good value, coming in under expectations of $4 billion or more.

Among mid-caps, QinetiQ was up 4.6 percent after it agreed to buy Meggit’s defence business. Liberum said the deal would enhance QinetiQ’s position in global test and aviation sectors.

Reporting by Alistair Smout; Editing by Keith Weir

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