Tourism-related stocks drag down Britain's FTSE index

Reuters , Wednesday 18 Nov 2015

Tourism-related stocks came under pressure in London again on Wednesday, dragging down Britain's benchmark share index, on concerns about international security after last week's attacks in Paris.

Budget carrier easyJet, British-Airways owner IAG and InterContinental Hotels Group were all down by between 1 and 2 percent in early trade. They helped push the blue chip FTSE 100 index, down 0.6 percent to 6,234.12 points by 0922 GMT.

The FTSE had rallied 2 percent on Tuesday but sentiment on the airline and leisure sector has been fragile since the attacks in Paris on Friday, which killed more than 120 people.

Gunfire and explosions shook the Paris suburb of St Denis early on Wednesday as French police surrounded a building where a Belgian Islamist militant suspected of masterminding last week's attacks was believed to be holed up.

The UK travel and leisure index fell 0.7 percent in early trade.

"Following the events in Paris, nerves regarding the outlook for travel and leisure stocks have resurfaced. Uncertainty over the impact on tourism remains," Keith Bowman, equity analyst at Hargreaves Lansdown, said.

"Furthermore, the full response of Western governments has not yet been clarified, adding to the question marks."

Shares of security-related companies have risen in the wake of the attacks but Rolls Royce, a leading global provider of defence aero engines and services, fell 1.8 percent to 545 pence on Wednesday.

Traders said some investors were taking profits after the share gained nearly 8 percent over the previous two sessions, and ahead of an operating review update by its chief executive next week.

"Rolls Royce has risen from lows of 505 pence on Monday to over 550 pence yesterday. Investors are pulling money out because of a good gain in a short space of time and have been prompted to do so by continuing terror threats," Tom Robertson, senior trader at Accendo Markets, said.

On the positive side, shares in Hikma Pharmaceuticals rose 1.9 percent after the drugmaker said it had received a letter from the U.S. Food and Drug Administration closing out a warning it received from the regulator last year on its injectables manufacturing plant in Portugal. 

Short link: