Markets: Tagging takes toll on G4S and Serco

Security giants G4S and Serco suffered heavy falls yesterday after a review found the firms had overcharged the UK government by tens of millions of pounds for running electronic criminal tagging schemes.

The scandal-hit blue chips were the two biggest fallers on the FTSE 100 index after it was revealed they now face a review of all their contracts following the government audit, which found evidence they had billed for tagging criminals who were either dead, in prison or never tagged in the first place. G4S fell 12.6p to 213p, while Serco dropped 54p to 626.5p.

The wider top tier made steady gains though – closing 38.45 points higher at 6,543.41 – as global markets resumed their rally after minutes of the United States Federal Reserve’s meeting eased fears of an imminent tapering of monetary stimulus.

Shai Heffetz, managing director at spread-betting provider InterTrader, said: “We remain bullish – the next target is 6,605.”

Sentiment was also boosted by a string of positive trading updates. Associated British Foods jumped 5 per cent or 92p to 1,907p after it reported a return to form for its Primark clothing division, with total sales up 20 per cent in the 16 weeks to 22 June.

Outside the top flight, Balfour Beatty defied tough construction markets with growing sales in the US and improving profitability in the UK, lifting its shares 6.2p higher to 225.7p.

Takeover talk surrounding Swedish Match gave shares in British American Tobacco (BAT) a boost after the firm was mentioned as a possible buyer, alongside Japan Tobacco and Philip Morris.

BAT climbed 13p to end the day at 3,495p, while rival Imperial Tobacco dipped 12p to close at 2,273p.

NEW YORK: The S&P 500 and Dow industrials closed at record highs last night, a day after Federal Reserve chairman Ben Bernanke reasserted that US monetary policy will remain accommodative for some time.

The Dow Jones rose 169.72 points or 1.11 per cent, to close at 15,461.38, while the S&P 500 gained 22.46 points or 1.36 per cent, ending on 1,675.08 and the Nasdaq Composite added 57.55 points or 1.63 per cent, to finish at 3,578.3, its highest close since October 2000.