Airline stocks headed south as fears of turbulence on the Continent spooked investors in London. As such, they were following in the wake of Deutsche Lufthansa, which sparked concern by striking a cautious tone when looking ahead to the second half.
Bernstein analysts also pointed a finger at the Paris-listed Air France and its new lower-cost service. “People had expected a little bit more, a little bit sooner,” they said, adding to the pressure on the likes of Easyjet and International Consolidated Airlines, the owner of British Airways, which faded by 18p to £14.13 and 2½p to 621p, respectively. Wizz Air, the mid-cap Hungary-based carrier, which is set to publish quarterly figures today, also dropped, by 24p to £25.88. Lufthansa, though, recovered some of its initial losses to close down only 1.2 per cent.
TheFTSE 100 endured a sluggish day of trading, slipping in and out of the red after the Office for National Statistics surprised economists by revealing that the headline rate of inflation had fallen to 2.6 per cent last month. Overall, the index closed down 13.91 points, or 0.19 per cent, at 7,390.22.
British Land rallied 19p to 623p after announcing a £300 million share buyback, lifting others in the property sector. Land Securities rose by 16p to £10.26 and Great Portland Estates picked up 19p to 617½p. Investors were reassured by Royal Mail’s half-year performance, too. Shares in the postal company rose by 12¼p to 411p after it said that letter revenues had been boosted by the general election.
Worldpay slid 1½p to 378½p. Berenberg labelled Vantiv’s proposed £9.1 billion takeover of the payment processing company “upsetting”, telling clients: “Shareholders we have spoken to are upset about the small premium being paid . . . and that they are being paid mostly in US-listed stock that they cannot hold.”
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Two new contracts helped Carillion to resume its climb after the slump that followed last week’s profit warning. The troubled construction and facilities management group closed up 3¾p at 70½p. G4S benefited on the read across, picking up 11¼p to close on 341p.
Experian slumped to the bottom of the Footsie after updating the market on the first quarter, losing 32p to £15.32. JP Morgan revised its target price of WPP from £19.69 to £19, sending the advertising group down 16p to £15.36, a one-year low.
As Wall Street banks continue to update on their progress in the latest quarter, Barclays fell 4p to 205p and Royal Bank of Scotland slipped 2½p to 251p.
The FTSE 250 closed up 92.79 points, or 0.48 per cent, at 19,613.38. IG Group, the spread-betting company, surged 16 per cent, or 91p, to 646p after its full-year profits came in ahead of expectations. Just Group also rose 7½p to 131½p after reporting a 3 per cent rise in new business sales in the first half.
Investec added Qinetiq to its “buy” list, arguing that its fall from 319¾p to a low of 259¼ between May and July had been unwarranted. Shares in the science and engineering group rose 10¾p to 274½p.
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At the other end of the index, Exane BNP Paribas downgraded Melrose Industries from “outperform” to “neutral,” sending the specialist engineer down 7½p to 233p. Lancashire Holdings was also under pressure, slipping 20p to 714½p, after Credit Suisse initiated coverage with an “underperform” rating.
Banking & Finance
Let us be clear about this
Clear Leisure, an Italy-focused property investor, poured cold water on takeover rumours and warned shareholders not to push it into further debt, sending its shares down 16 per cent (Callum Jones writes).
The Aim-quoted company, which is embroiled in several legal disputes, is holding a vote at its annual meeting next week on issuing further shares in an attempt to raise funds. It said that if it was unable to raise equity, it would be forced to seek further debt, which “may not be in the interests of the shareholders as a whole”. Eufingest, the largest shareholder, has lent the company about €2.4 million.
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It was rumoured that Eufingest, which has a 20 per cent stake, would make an offer for the company, but Clear Leisure said that such rumours are “without merit”.
Luke Johnson, the former chairman of Pizza Express and Channel 4, was briefly chairman of Clear Leisure and retains a 9 per cent stake after buying into the company because it “appeared to be trading at a fraction of its balance sheet value”. “Unfortunately the figures were nonsense,” he wrote in The Sunday Times last weekend. “I lost most of my money.”
Clear Leisure closed just above 1p.
Wall Street report
Goldman Sachs is a classic Dow Jones industrial average stock, the bluest of blue chips, so the bank’s latest mixed bag of figures weighed heavily on the index and the Dow spent the day in the red, closing 54.99 points down at 21,574.73.