Shares in French IT services group Capgemini SA (CAP.FR) soared Thursday after the group raised its full-year outlook and posted better-than-expected first half results as IT services markets continue to improve.

At 0854 GMT, the company's shares were trading up 6.7% at EUR36.15, outperforming a 0.5% rise in the CAC-40 index, as analysts welcomed the first-half results and were positively surprised by the raised guidance.

Paris-based Capgemini, Europe's largest computer services company, said it now expects full-year like-for-like revenue to drop between 0.5% and 1.5%, compared to its previous forecast for a drop of between 2% and 4%.

For the second half, the group said it expects like-for-like revenue to grow between 3% and 5%.

Capgemini also edged up its full-year margin target as markets are expected to continue improving. It said its earnings before interest and tax, or EBIT, margin should exceed 6.5% this year compared to previous guidance of between 6% and 6.5%.

"Even though the effects of the crisis haven't completely vanished yet, we are observing a clear improvement...we are returning to growth," Capgemini Chief Executive Paul Hermelin said in a conference call.

The CEO said that the level of bookings also suggests the improvement will continue in the second half of the year.

Bookings rose 14% on a like-for-like basis in the first half, with outsourcing recording the greatest increase.

The group's book to bill ratio - the ratio of orders received to orders filled - was 1.17 in the first half for its three cyclical activities of consulting, technology and local professional services.

Along with rivals Atos Origin (ATO.FR) and U.K.-based Logica PLC (LOG.LN), the company has faced tough market conditions since last year, as big customers delayed investment and purchasing plans amid the financial and economic crisis. But there have been signs of recovery in orders since the start of the year as clients have a renewed appetite to invest in new projects.

Atos Origin Wednesday said it expects revenue to stabilize in the second half as markets will improve progressively.

Still, worries about public sector budget cuts have weighed on Capgemini shares and caused Atos shares to drop sharply Wednesday after the group said it would cut staff in the U.K. to prepare for an anticipated slowdown in U.K. public sector spending.

Hermelin said that Capgemini had already felt the first signs of a slowdown in cyclical activities in the UK public sector, notably in consulting, but that in the medium-term, the government's spending cut will be an opportunity to win new contracts that will help the government save costs.

Capgemini's net profit for the first six months of the year rose 2.4% to EUR101 million, from EUR78 million last year, above expectations of EUR85.3 million.

Earnings before interest and tax fell to EUR245 million from EUR287 million last year, but beat analysts expectations of EUR226 million. This gave the company an EBIT margin of 5.8%.

Revenue in the first half fell 3.8% to EUR4.21 billion from EUR4.38 billion in the same period a year ago, also ahead of analysts' forecasts of EUR4.08 billion.

On a like-for-like basis, which strips out acquisitions, disposals, and currency movements, revenue fell 6.1% in the first six months of the year.

-By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 54; ruth.bender@dowjones.com

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