OUTSOURCING and security specialist G4S saw its shares tumble into the red today after warning over profits following a tough first quarter.

The stock was the biggest faller in the FTSE 100 Index, declining by 15 per cent, as the company blamed weakening margins on contracts in austerity- hit Europe for the disappointing update.

But the wider top tier powered ahead to a new five-and-a-half-year high – up 35.8 points to 6557.3 – as Wall Street also opened in positive territory, with the Dow Jones Industrial Average trading at record levels on optimism over the US economy and following robust recent earnings updates from companies.

Trading had started on the front foot after Asian markets put in a strong performance, with Japan’s Nikkei surging above 14,000 for the first time in nearly five years.

Mining stocks and banks were among the big risers, with Evraz leading the way with a 10.6p gain to 166.2p.

G4S topped the fallers, plunging 45.5p to 260p. The firm, which provides services from security guards to prisons, said overall revenues for the first quarter grew by 7.5 per cent compared with the same period last year, but warned of a profits squeeze.

The group’s margin was down 0.6 per cent as it blamed factors including challenging conditions in Europe and pricing pressure in the UK – where G4S came under fire over the Olympics security fiasco.

HSBC shares lifted 21.1p to 735p on the back of a better- than-expected first quarter update, showing underlying profits up by a third to $7.6bn (£4.9bn).

Chief executive Stuart Gulliver said the industry was heading into calmer waters after the upheavals of the credit crisis and the payment protection insurance scandal. Meanwhile, rival banks also made solid gains, with Barclays up 11.3p at 307.4p.