LONDON UK shares rose overall on Thursday - though not as much as European shares after the European Central Bank extended its stimulus programme - while outsourcing firm Capita (CPI.L) tumbled after a profit warning.
The blue chip FTSE 100 index .FTSE was up 0.4 percent at 6,931.55 points by the close, hitting its highest level in one month, though euro zone blue chips .STOXX50E outpaced British shares to end 1.4 percent higher.
European shares rose, helped by strength in banks following the European Central Bank's decision to extend its asset purchase programme by 9 months, longer than had been expected, while cutting the size of monthly purchases.
Shares were choppy after the announcement, but turned higher. The ECB loosened restrictions on the assets it could purchase and President Mario Draghi gave a dovish press conference where he said the level of purchases could rise again if needed.
"Despite the reduction in the amount of asset purchases from April 2017, a somewhat longer than expected extension in the QE timeline (to the end of December) as well as the overall dovish tone of the press conference, suggest that the high level of monetary accommodation in the Euro area remains in place," said Anna Stupnytska, global economist at Fidelity International.
The announcement helped Britain's FTSE 100 into positive territory after early falls, though a slump in Capita contributed to the index's underperformance.
Capita, the top faller, plunged 14 percent and hit its lowest since July 2006 after a second profit warning in three months, blaming Brexit-related client indecision. It said it would sell assets and trim costs to protect its balance sheet.
Outsourcing firms have been under pressure since Britain voted to leave the European Union in June. Shares in peer Mitie (MTO.L), which issued a second profit warning in November, fell 1.3 percent.
Disappointing results hit shares in mid-cap sporting goods retailer Sports Direct (SPD.L), which dropped more than 8 percent. Its shares are down 50 percent so far in 2016, having been hit by a plunge in sterling following the Brexit vote as well as criticism over the treatment of its workers.
Betting companies William Hill (WMH.L) and Ladbrokes Coral Group (LCL.L) fell 6 percent and 2.8 percent following a media report about a clampdown on betting machines.
Towards the top of the FTSE 100, tour operator TUI (TUIT.L) rose 2 percent after extending its existing profit forecast for another year.
Advertiser WPP (WPP.L) rose 4.6 percent to top the blue chip index after an upgrade to "buy" from "hold" from Jefferies, whose analysts said they expected a limited impact on the firm from a reported U.S. Justice Department investigation into the industry.
The report had knocked back WPP shares in the previous session.
(Editing by Tom Heneghan)