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Markets

Britain's FTSE falls as travel stocks suffer

Published Updated

imageLONDON: UK shares fell on Thursday after the disappearance of an EgyptAir flight and a drop in summer bookings for Thomas Cook weighed on the travel sector, while mining shares also dipped.

The blue chip FTSE 100 index dropped 1.4 percent to 6,082.29 points by 1101 GMT, underperforming the broader European market.

British travel stocks came under pressure after mid-cap Thomas Cook slumped 16.6 percent to its lowest level since March 2013 after saying that summer bookings were down 5 percent as tourists avoided Turkey.

"The fact that you're going to confess that you're going to have earnings at the bottom end of the range for the coming period is certainly going to keep investors rather cautious overall," Chris Beauchamp, senior market analyst at IG, said.

Its blue-chip peer travel company TUI fell 2.7 percent.

News that an EgyptAir flight carrying 66 passengers from Paris to Cairo disappeared over the Mediterranean also weighed on the sector.

The FTSE 350 Travel & Leisure index fell 1.1 percent.

British miners were also among the top sectoral fallers, down over 4 percent after U.S. Federal Reserve minutes released late on Wednesday signalled that an interest rate hike was on the table for June.

Shares in Anglo American, Fresnillo, BHP Billiton, Rio Tinto and Glencore were all down between 4.2 percent to 5.9 percent as a stronger dollar put pressure on metals prices, as metals became more expensive for buyers paying with other currencies.

"With June now live, you can hardly ... (blame) people continuing to push into the U.S. dollar which spells a difficult period for commodity prices, which makes it difficult for miners," IG'S Beauchamp said.

Fresnillo was also hit by a downgrade to "sell" from "neutral" by Citi.

Royal Mail Plc dropped 3.5 percent after warning it faced slightly higher than expected costs to modernise its operations in what it said was an extremely competitive domestic market.

Merlin also warned of tough trading conditions, saying London was a tough market as it reported results broadly in line with expectations. Its shares fell 2.8 percent.

Stocks going ex-dividend also weighed, with financial services firm Provident Financial falling 3.5 percent.

Copyright Reuters, 2016

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