European travel stocks slump on Brussels blasts

European stock


Airline and travel stocks tumbled across Europe on Tuesday following deadly explosions at the airport and metro in Brussels, pushing stock market indices into the red.

After falls of between 1.0 and 1.5 percent for Europe’s main indices as news of the explosions first filtered through, the region’s stock markets were showing losses of around half a percent nearing midday.

The euro fell against the dollar, while haven assets gold and the yen gave up earlier gains.

“While travel stocks had their knee-jerk reaction sell-off and safe havens were bid (higher), relative calm has quickly returned,” said Mike van Dulken, head of research at Accendo Markets.

Belgian firefighters on Tuesday said there were at least 21 dead after “enormous” blasts hit Brussels airport and the city’s metro system.

Around 1000 GMT, London’s benchmark FTSE 100 index was down 0.4 percent, while in the eurozone, Frankfurt’s DAX 30 fell 0.5 percent and the Paris CAC 40 dropped 0.3 percent.

Sentiment was boosted later in the morning by data showing that German investor sentiment had risen slightly this month.

– Travel sector hit –
In London, shares in tourism groups Thomas Cook and TUI slid 2.8 percent and 3.2 percent respectively, while InterContinental Hotels Group shed 2.0 percent.

Easyjet dropped 3.1 percent and IAG, parent of British Airways and Iberia, gave up 3.5 percent in value.

French hotels group Accor meanwhile lost 3.3 percent and German airline Deutsche Lufthansa retreated 2.0 percent.

“The explosions are bad news for airlines which have just started to see passenger demand pick up again after a slump in the wake of multiple terrorist incidents at the end of last year, including the attack on Paris,” said Jasper Lawler, analyst at trading group CMC Markets.

“The response from authorities is likely to be another extension of security controls which make travel even less attractive for tourists.”

Outside of Europe, Tokyo stocks rose sharply on Tuesday, fuelled by earlier weakness in the yen, while broader Asian markets were subdued as last week’s rally waned.

A sense of stability had returned to global markets following the Federal Reserve’s decision last week to scale back its forecasts on hiking borrowing costs, after a tumultuous first two months of the year.

China’s key Shanghai Composite Index ended down 0.6 percent a day after Chinese shares surged as authorities relaxed rules on margin trading for the first time since last summer’s collapse in mainland markets.

Margin trading, whereby investors only need to deposit a small proportion of the value of their trades, was behind a boom that sent the Shanghai bourse up 150 percent in 12 months, before it plummeted from last June after regulators moved to tighten rules on the practice.

– Key figures around 1000 GMT –
London – FTSE 100: DOWN 0.4 percent at 6,160.79

Frankfurt – DAX 30: DOWN 0.5 percent at 9,901.18

Paris – CAC 40: DOWN 0.3 percent at 4,414.71

EURO STOXX 50: DOWN 0.5 percent at 3,034.42

Tokyo – Nikkei 225: UP 1.9 percent at 17,048.55 (close)

Shanghai – composite: DOWN 0.6 percent at 2,999.36 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 20,666.75 (close)

New York – Dow: UP 0.1 percent at 17,623.87 (close)

Euro/dollar: DOWN at $1.1207 from $1.1245 on Monday

Dollar/yen: DOWN at 111.70 yen from 111.94 yen

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