Stocks held on to 12-year highs on Tuesday morning as a sharp drop in consumer-price inflation lifted the outlook for the UK economy.Helping to keep markets in positive territory this morning was falling inflation in the UK. The rise in consumer prices slowed sharply from an annual rate of 2.8% to 2.4% in April, as decline in the price of fuel offset an increase in food prices. Analysts had expected a figure closer to 2.7%. This was the first drop in inflation since last September and the lowest since June last year. Analyst Simon Hayes from Barclays Research said that if this fall in inflation is sustained it should provide a "welcome fillip" to the UK economy. He said: "It lessens the chronic squeeze on real pay and should help support domestic demand. In addition, with inflation less egregiously adrift of the 2.0% target, the Bank of England has more leeway to boost policy should the recovery falter."The FTSE 100 finished at 6,755.63 on Monday afternoon, a level not seen since September 2000, while other markets in the US and Europe continue to teeter around all-time highs. In 2013 so far, London's benchmark index has gained nearly 15%."In a technical sense markets are beginning to look a little over extended, and the potential for profit taking to trigger a market correction has to be a consideration for even the most fervent bulls," said Matt Basi, the Head of UK Sales Trading at CMC Markets."That said, as the cliché goes, markets can remain over extended for a lot longer than retail traders can remain solvent. As ever, caution is advised when fighting the trend," he said.FTSE 100: Capita gains; Carnival sinksOutsourcing group Capita surged this morning after being selected by O2 as its preferred bidder to for a £1.2bn contract and raising its organic revenue growth guidance for the full year. Meanwhile, a report in the Financial Times yesterday suggested that the company could be up for a large contract with the Metropolitan Police.Mining stocks were also performing well this morning after the biggest increase in gold prices in over 10 months yesterday. Precious metals peers Polymetal and Randgold were making impressive gains this morning.Leading the fallers was cruise operator Carnival after saying that it earnings per share will be $1.45-1.65 in 2013, well below earlier guidance of $1.80-2.10. Panmure Gordon labelled Carnival as a "serial disappointed" as it kept its 'sell' rating on the stock this morning.G4S, the security firm which dropped earlier this month after giving disappointing guidance on margins, declined after announcing the resignation of CEO Nick Buckles. He will be replaced by Ashley Almanza, who has been working as CFO for just three weeks.Burberry, the British luxury brand, edged higher after a strong performance in Asia helped drive record annual revenue and profit in 2012/13, with both figures beating analysts' expectations.High Street chain M&S also pleased with its full-year results with a 5.8% fall in underlying profits meeting market forecasts. The company posted flat sales owing as a strong performance in food was offset by weakness in general merchandise.The market reaction to Vodafone's annual figures meanwhile was rather muted, after the company revealed a 4.2% fall in revenues as sales in Southern Europe continue to struggle.FTSE 250: HomeServe jumpsHome emergency repairs group HomeServe advanced after the company maintained its full-year dividend despite a fall in profits as it said it was confident about plans for stable UK customer numbers.Online gaming group bwin.party was in the red after seeing sales shrink sharply in the first quarter as it looks to restructure in the face of increased regulation.FTSE 100 - RisersPolymetal International (POLY) 663.50p +7.54%Capita (CPI) 1,016.00p +7.06%Marks & Spencer Group (MKS) 465.10p +5.58%Rio Tinto (RIO) 3,012.00p +3.74%Babcock International Group (BAB) 1,186.00p +3.58%Randgold Resources Ltd. (RRS) 4,864.00p +3.58%Antofagasta (ANTO) 956.00p +3.24%Glencore Xstrata (GLEN) 345.10p +3.03%Fresnillo (FRES) 1,063.00p +2.80%BHP Billiton (BLT) 1,974.50p +2.57%FTSE 100 - FallersCarnival (CCL) 2,130.00p -11.62%Royal Bank of Scotland Group (RBS) 339.70p -3.47%Evraz (EVR) 149.40p -1.90%GKN (GKN) 303.70p -1.81%Barclays (BARC) 320.85p -1.64%SABMiller (SAB) 3,531.00p -1.53%TUI Travel (TT.) 366.80p -1.45%Aviva (AV.) 335.40p -1.18%National Grid (NG.) 837.50p -1.18%London Stock Exchange Group (LSE) 1,411.00p -1.05%FTSE 250 - RisersHomeserve (HSV) 254.00p +11.89%Ophir Energy (OPHR) 403.30p +5.27%Inmarsat (ISAT) 699.00p +4.96%New World Resources A Shares (NWR) 115.70p +4.52%Essar Energy (ESSR) 150.20p +3.51%Kenmare Resources (KMR) 30.80p +3.11%QinetiQ Group (QQ.) 204.90p +2.96%Imagination Technologies Group (IMG) 346.20p +2.76%Hochschild Mining (HOC) 255.70p +2.69%Dunelm Group (DNLM) 870.00p +2.59%FTSE 250 - FallersParagon Group Of Companies (PAG) 334.50p -3.38%Telecom Plus (TEP) 1,250.00p -2.72%Petropavlovsk (POG) 124.90p -2.57%Bwin.party Digital Entertainment (BPTY) 139.80p -2.44%Pennon Group (PNN) 703.50p -2.22%Enterprise Inns (ETI) 117.50p -2.08%Genus (GNS) 1,445.00p -1.97%COLT Group SA (COLT) 116.60p -1.93%Daejan Holdings (DJAN) 3,999.00p -1.77%Chemring Group (CHG) 288.60p -1.57%BC