Barclays Share News (BARC)

LONDON (Alliance News) - The FTSE 100 was off its session lows Tuesday midday in London, but still firmly in the red, after better-than-expected economic data from Europe and the UK helped the blue-chip index recover some of the ground lost at the open on news of several explosions at a Brussels airport and underground station.

The FTSE 100 was down 0.6%, or 41.66 points, at 6,142.92, led lower by travel stocks such as IAG, TUI and Carnival. The large caps index was recovering from an intraday low of 6,110.39 shortly after the open. Stocks in Europe were also lower, with the CAC 40 in Paris and the DAX 30 in Frankfurt down 0.5% and 0.3%, respectively.

Two deadly explosions at the Brussels Airport and separate blasts at metro stations in the Belgian capital Brussels during the morning rush-hour killed at least 23 people and injured dozens.

The Zaventem airport was locked down until further notice and flights were redirected to Antwerp. All metro stations were closed. Eurostar trains to Brussels were canceled and the French-Belgian border was closed after the attacks.

The threat level in Belgium was raised to 'maximum', the official Belga News Agency reported. Travel security across Europe was stepped up as an immediate response to the terror act.

Despite recovering from the initial shock of the news, travel & leisure stocks were still among the worst performers in the blue-chip index at midday, with airlines International Consolidated Airlines Group and easyJet down 3.3% and 1.4%, respectively. Intercontinental Hotels Group was down 2.0%, tour operator TUI Group down 2.5% and cruise line Carnival, down 2.3%.

Shares in FTSE 250-listed Thomas Cook Group were down, down 6.8%. The news of the explosions dramatically reinforced a warning about the summer holiday season from the company. The tour operator said summer holiday bookings are lower than this time last year as they continue to be disrupted by a "volatile geopolitical backdrop".

The travel company said 90% of the winter season is sold, as expected, with higher pricing in most source markets. Summer 2016 is 40% sold, with bookings below last year.

Thomas Cook warned that market conditions remain challenging, as consumer confidence is affected by continued disruption in certain key destinations, although it has benefited from rebalancing capacity to countries such as Spain and other long-haul destinations from countries that have been receiving lower demand, such as Turkey.

"While travel stocks had their knee-jerk reaction sell-off and safehavens were bid, relative calm has quickly returned," said Accendo Market's Mike van Dulken. "Gold understandably benefited from fresh safehaven seeking but has since pulled back as risk assets like equities regain poise".

The gold price spiked to a high of USD1,260.10 on news of the explosions, but since has given back some ground, standing at USD1,251.34 an ounce at midday. At the London equities close Monday, the metal was quoted at USD1,245.30 an ounce.

Gold miners Randgold Resources and Fresnillo were benefiting from the rise in gold prices, up 1.3% and 1.0%, respectively.

Meanwhile, the pound dropped considerably against the dollar, quoted at USD1.4272 at midday, having stood at USD1.4396 prior to the news from Brussels. Some analysts said the events in Brussels could be supportive for the 'Leave' campaign vote ahead of the Brexit referendum on June 23. Sterling stood at USD1.4393 at the equities close Monday.

Meanwhile, the euro also slid against the greenback. The single currency was quoted at USD1.1212 midday against USD1.1250 at the equities close on Monday.

"It's always a sad day when terrorism has to be the driver to kick markets from their state of calm. It's also a sign of times when the market response is - in relative terms - so muted. Investors have had to develop a thick skin for such horrific events over the years and their encouraging defiance may again result in near-term recovery for the stocks affected," Accendo's van Dulken said.

Eurozone private sector activity regained momentum in March as it expanded at the fastest pace since December, flash survey results from Markit showed. The composite output Purchasing Managers' Index rose more than expected to 53.7 from 53.0 in February. It was forecast to improve to 53.2.

The eurozone services PMI climbed to 54.0 from 53.3 a month ago, with economists expecting a score of 53.5. At the same time, the manufacturing PMI came in at 51.4, up from 51.2 in February and above the expected score was 51.4.

Germany's composite PMI came in at 54.1 in March, unchanged from February's 5-month low. Any reading above 50 indicates expansion in the sector. The services PMI rose to a 3-month high of 55.5 in March from 55.3 in the previous month. Economists had expected the index to fall to 55.0. At the same time, the manufacturing PMI dropped to 50.4 in March from 50.5 in February. The latest score was the weakest in sixteen months. In contrast, it was expected to climb to 50.8.

Meanwhile, UK inflation held steady in February and factory gate prices dropped less than expected, figures from the Office for National Statistics showed.

On a yearly basis, consumer prices rose 0.3% in February matching the January's reading. Prices were expected to increase 0.4%. Month-on-month, consumer prices rose 0.2% reversing January's 0.8% fall. Economists had forecast a 0.4% rise. However, core inflation excluding energy, food, alcoholic beverages and tobacco held steady at 1.2%.

"Today's data release continues the trend of inflation being at or very close to zero, and confirms the complete absence of pressure on the Bank of England to lift interest rates," said Ben Brettell, senior economist at Hargreaves Lansdown. "However, the UK economy is battling a number of significant headwinds at present. Slowing global growth, the upcoming EU referendum, and deflation in the euro zone are creating considerable uncertainty, while wage growth appears much weaker than the peak we saw last summer".

Another report from ONS showed that UK output prices dropped 1.1% after easing 1% in January. The decline was smaller than an expected fall of 1.2%. At the same time, output prices gained 0.1% offsetting January's 0.1% drop.

Elsewhere on the London Stock Exchange, Barclays was down 2.9% after HSBC cut the stock to Hold from Buy, while Goldman Sachs trimmed its price target on Barclays shares.

The FTSE 250 was down 0.2%, or 37.25 points, at 16,825.58 and the AIM All-Share was up 0.2%, or 1.28 points, at 707.33.

Mid-cap housebuilder Bellway was up 3.3%. It said pretax profit surged in the first half of its financial year, after it saw a rise in both the number of houses the company sold and the price at which these houses were sold at, prompting a hike to its dividend payout.

IG Group Holdings was up 2.5%. The online brokerage and trading platform said revenue grew in the third quarter as it benefited from volatile markets. IG said revenue for the three months to the end of February hit GBP122.0 million, 18% higher year-on-year and a 9.0% increase on the second quarter. The group said the constant flow of macroeconomic news through the quarter created "reasonable" volatility levels in financial markets, creating a range of trading opportunities for IG clients.

Shares in private equity investor SVG Capital were up 2.0% after it said its net asset value per share grew in 2015, significantly outperforming the market. SVG said its net asset value per share rose 11% in the year to 654.0 pence, compared to a 5.0% decline for the FTSE 350. It marked the sixth consecutive year of double-digit NAV growth for SVG, the company said.

Luxury good maker Jimmy Choo was firmly in the red, down 3.4%, despite the company saying it swung to a profit in 2015 as it booked lower exceptional and financial costs than in 2014 and as revenue grew on strong sales of its shoe lines. Jimmy Choo said the main driver of revenue growth was shoes, which represent over three quarters of sales. It said 2016 looks to be tough for luxury goods companies amid challenging market conditions, namely due to a slowdown in China.

Stocks in New York are expected to track the losses in Europe, with the DJIA seen down 0.1%, while the S&P 500 and the Nasdaq 100 are both called down 0.3%. Both the Dow and the S&P ended Monday at their highest levels so far in 2016.

In the US corporate calendar, sport goods retailer Nike publishes a second-quarter update after the US market close.

On the US economic data front, the Redbook index is due at 1255 GMT, while Markit's manufacturing PMI is due at 1345 GMT. The Richmond Fed manufacturing index is due at 1400 GMT. After the European equities close, the American Petroleum Institute weekly crude oil stock data are expected at 2030 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2016 Alliance News Limited. All Rights Reserved.