Spain terror attacks lead to FTSE slump for airline and travel agency shares
Airline and travel agency stocks took a dive on Friday as terror attacks in Spain raised fears of a pending drop in European tourist numbers.
Investor jitters dragged on London's blue chip index, which slid 1% to 7,313.15 points in morning trading.
British Airways owner International Consolidation Airlines Group (IAG) was one of the worst performing FTSE 100 stocks, down 2% or 13p at 611p in morning trading, while travel agency TUI dropped 0.5% to 1,327p.
Low cost carrier easyJet tumbled 2.1% to 1,273p. The low cost carrier revealed its first fall in annual profits for six years in November, due in part to the plunging pound and terrorism fears.
Continental carriers were dragging down their respective European indexes, with the French Cac 40 dropping 1.2%, the German Dax falling 0.8% and Spain's IBEX dropping more than 1%.
Ryanair shares, listed on Ireland's stock exchange, slid more than 2%.
Neil Wilson, a senior market analyst at ETX Capital, said: "Airlines bore the brunt of a risk-off turn on the open, with shares in Ryanair, IAG, Air France KLM, Lufthansa and EasyJet all slumping following the terror attacks in Spain.
"As we've seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings.
"Investors are concerned that demand will fall over the rest of the year, which was already looking like it would be a tough patch for the industry."
London-listed Alton Towers owner Merlin Entertainments was knocked down 1.4% or 6.6p to 457.8p, amid fears of a slowdown in visitors to some of the company's main tourist attractions including Alton Towers and the London Eye.
FTSE 250 stocks were also hit by the sell-off, with Thomas Cook down 2% to 122.3p and Wizz Air among the biggest fallers down 2.5% or 72p at 2,794p.
London's second tier index was down around 0.8% at 19,614.34 points.
The euro was also trading lower against international peers, with the pound up 0.1% at 1.098 versus the eurozone currency. Versus the US dollar, the pound rose 0.3% to 1.290.
While the drop in tourism-related stocks echoed a wider market sell-off, Mr Wilson said a broad base recovery might not be far behind.
"If the lesson from previous terror attacks is anything to go by, whilst airlines and maybe some luxury goods stocks can expect to see earnings hit, the broader market is capable of rebounding reasonably quickly."