Britain’s benchmark stocks gauge declined on Tuesday after airline shares including International Consolidated Airlines curved in under the weight of a profit warning from Air France-KLM.
The blue-chip FTSE 100 index dropped 1.3%or 85.06 points to 6,738.45 points.
International Consolidated Airlines Group, which owns British Airways, plummeted 7% after Air France-KLM’s announced a profit warning, putting the ICAG in the position of the worst performer in the FTSE 100 index in terms of percentages.
Budget carrier easyJet dropped 5.8% after Air France-KLM cautioned that its profits for 2014 could drop by as much as 12% from the previously projected figure because of over-capacity and weak prices.
“The profit warning just before the busy summer months for the airlines sector has dampened investors’ sentiment. It’s a confirmation that, generally, the last three months had been difficult for the sector,” Tom Robertson of Accendo Markets is quoted by Reuters as saying.
Marks & Spencer, a clothing and food retailer, dropped 1.3% after the firm announced that its switch to a new online portal had held back its first-quarter sales.
Although M&S reaffirmed its full-year profit outlook, many analysts believe the company faced pressure, with its results released on Tuesday showing a drop for the 12th a three-month period in a row.
Pharmaceutical Shire also lost 2.6% as traders reacted to disappointment from competitor Abbvie’s latest overture for Shire. Some investors said they wanted Abbvie to raise its bid.
Traders said a sudden drop in UK manufacturing in May was also pulling down the FTSE.
Prior winning streaks this year have not managed to push the FTSE above the 6,900 points mark, which is seeing as a vital threshold to meet before it ascend to record highs.
According to Bloomberg, Greggs sank 5.7% to 532.5 pence after revelation that Troy Asset Management sold shares amounting to about 5.5 million in the firm.
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