Drop in shares of major airlines subdues markets

European stocks edged lower on Thursday as a drop in the shares of major airlines offset gains in some banks, propped up by signals of support for the sector from the European Central Bank.

DUBLIN

Iseq heavyweight

Ryanair

dragged the benchmark Irish stock market index lower from the very outset of trading after rival

EasyJet

reported weak quarterly sales and warned on headwinds from terrorist attacks and Brexit. Sentiment towards the sector was also rattled by a profit-warning from

Deutsche Lufthansa

.

Ryanair, which makes up more than 16 per cent of the Iseq, dropped 5.2 per cent to €11.03, making it the worst performing large-cap on the index, which itself ended the session down 1.1 per cent at 5,814.65 points.

"The cautious tone to EasyJet's update and the weaker-than-expected revenue per seat will raise concerns that Ryanair may deliver a similarly weak first-quarter 2017 result when they report on Monday," said Darren McKinley, an analyst with Merrion Capital.

Independent News & Media lost 1.5 per cent to 13.2 cents as sector-followers reacted to a weak trading update from Daily Mail and General Trust, which showed double-digit print advertising declines at the Daily mail and Mail on Sunday.

Bucking the trend, PetroNeft soared 40 per cent after the oil and gas explorer said it had drilled its fourth successful well at South Arbuzovskoye, and it has seen further increases to its production levels from its Licence 61 in Tomsk Oblast in Russia.

Banking stocks were also in demand, with Bank of Ireland rising 3.6 per cent to 20 cents, while Permanent TSB gained 2.2 per cent to €2.18.

LONDON

Britain’s top share index slipped after four straight days of gains, with airline stocks falling sharply on the

EasyJet

and

Lufthansa

warnings.The FTSE 100 share index to close 0.4 percent lower at 6,699.89 points.

Shares in EasyJet dropped 5.3 per cent. Aer Lingus's parent IAG lost 3.6 per cent. "The airline sector looks set for a pretty unpleasant ride in the short term, and investors might want to fasten their seat belts, because there could be turbulence ahead," said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

On the positive side, equipment rental company Ashtead rose 5.1 per cent, gathering strength from a surge in shares of US peer United Rentals after it reported better than expected results overnight.

Among mid-caps, bookmaker William Hill rallied 10.6 per cent, recovering its post-Brexit losses, after the company fired chief executive James Henderson because the bookmaker's board said he was failing to deliver enough growth in online and international gambling.

Online electricals retailer AO World jumped 9.8 per cent after saying its full-year outlook was unchanged despite economic uncertainty following the Brexit vote and its potential impact on consumer confidence and suppliers' foreign exchange exposure.

EUROPE

As in Dublin and London, airline stocks were sold off across Europe amid fears some consumers may avoid travelling abroad for holidays after last week’s attack in Nice and attempted coup in Turkey.

Lufthansa slid 6 per cent after issuing a profit warning. Air France-KLM fell 4.1 per cent.

However, Hermes International rose 4.6 per cent after the maker of luxury handbags reported sales growth that topped projections.

Among other shares active on corporate news, Yara International jumped 5.5 percent after the Norwegian chemicals company said it began the third quarter with a stronger European order book from a year earlier.

WALL STREET

US stocks were lower in late afternoon trade on Wall Street as results from companies including

Intel

and

Southwest Airlines

disappointed, casting doubt on whether corporate earnings will be healthy enough to sustain equities at all-time highs.

Intel slipped 4.4 per cent after reporting slower growth in its server-chip division. American Express lost 1.8 per cent as its revenue was short of predictions. Southwest Airlines tumbled 9.6 per cent, weighing on shares of other carriers.

Qualcomm gained 8 per cent after it gave a forecast that beat analysts' estimates, and EBay surged 12 per cent after also raising its outlook.

The S&P 500 fell 0.3 per cent, while the Dow Jones Industrial Average declined 0.4 per cent, threatening to halt its longest winning streak in more than three years, and the Nasdaq Composite Index slipped 0.2 per cent.