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LONDON (Alliance News) - London stocks opened lower Tuesday, as reports of two explosions at a Brussels airport and weak outlook from tour operator Thomas Cook hit travel stocks.
The FTSE 100 was down 1.2%, or 70.13 points, at 6,114.45.
The FTSE 250 was down 0.5% at 16,772.99 and the AIM All-Share was flat at 706.14. In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were down 0.7% and 0.9%, respectively.
Travel stocks were leading declines in London early Tuesday. At least one person has died after two explosions in the departure hall of the main airport of the Belgian capital, according to local media reports. Several people were also said to be injured.
The explosions took place one after the other around 8 am in the morning, eyewitnesses told the Belga news agency. The airport was shut down, with no flights departing or landing. Train traffic to the airport was also halted, Belga wrote.
The explosions dramatically reinforced a warning about the summer holiday season from Thomas Cook. 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.
Thomas Cook Group was biggest loser in the mid-cap FTSE 250 index, down 5.1%. But a read-across also appeared to be hurting its blue-chip peers, with airlines easyJet and IAG down 3.4% and 3.9%, respectively. Hotelier IHG was down 2.5%, tour operator TUI down 3.1% and cruise line Carnival, down 2.5%, among the worst FTSE 100 performers.
Earlier, Carnival had provided more positive travel news, saying Cuba has granted approval for the company to begin travel to Cuba starting on May 1, 2016. Following US authorisation granted in July 2015, Carnival is now cleared to operate the 704-passenger MV Adonia to Cuba through its newest brand Fathom. This marks the first time in over 50 years a cruise ship is approved to sail from the US to Cuba.
Gold miners were the best blue-chip performers after the gold price spiked higher touching highs it hasn't seen in 3 days. Accendo Markets analyst Mike Van Dulken said this was also after the reports of the explosions at the Brussels Airport.
"Markets are likely to move as more details emerge and that will include safe-havens," said van Dulken.
Gold was quoted at USD1,257.70, much higher than the USD1,245.30 at the London equities close on Monday. Randgold Resources and Fresnillo were both up 1.3%, leading the FTSE 100 gainers.
Oil-related stocks also were among the few gainers, as Brent crude prices touched levels close to USD42 a barrel overnight. Investors were reacting to renewed rumours about a production freeze.
"This time someone from OPEC or somewhere has said Iran may participate in a freeze at a later date, which doesn't mean 'Iran says it will participate in a production freeze' and does nothing to address current oversupply issues", noted Accendo's van Dulken.
Brent was quoted at USD41.41 after the open against USD41.27 at the close Monday. It reached a high of USD41.73 in early trade.
BP was up 0.6% while Royal Dutch Shell 'A' was up 0.2%.
Elsewhere, Wolseley was down 2.2%. The FTSE 100 building materials company said its pretax profit more than tripled in the first half of its financial year on the back of strong commercial and residential markets for its US business, as it said it expects full-year results in line with analyst expectations.
Wolseley reported a pretax profit of GBP367.0 million in the six months to January 31, up from GBP103.0 million a year earlier. A strong performance by Wolseley's US business produced operating profit of GBP330.0 million in the recent period, up from GBP308.0 million a year before.
The group also booked a much smaller impairment charge than a year earlier, when profit was hit by a GBP245.0 million impairment in the Nordics. Wolseley said the strong performance in the US offset a challenging repair, maintenance and improvement market in the UK, as well as price deflation in the UK, US and Central Europe. Revenue was at GBP6.80 billion, up from GBP6.42 billion a year earlier.
BT Group was down 2.0% after the UK media and communications regulator Ofcom set out new rules designed to push the company to improve its business lines performance. Ofcom said the new rules, part of its Connectivity Market Review, will seek to improve BT's performance in installing high-speed lines for businesses and cut the wholesale prices BT charges for the lines.
The regulator said Openreach, BT's network infrastructure arm, is taking too long to install leased lines and is "not providing adequate certainty that the services will be provided by the date first given to the customer."
Ofcom also found Openreach is failing to complete one-in-four leased line installations on the initial date promised to customers. As a result, Ofcom has proposed Openreach must complete 80% of leased-line orders on time by March 2017, with this requirement rising to 90% by April 2018.
Investors were expecting to find catalysts Tuesday in a much busier economic calendar than on Monday, with focus on UK inflation data due at 0930 GMT.
CMC Markets chief market analyst Michael Hewson noted UK inflation has also been rising steadily since the -0.1% reading of November, and the analyst expects another rise expected to 0.4%, from January's reading of 0.3%.
Analysts at Societe Generale also expected a 0.4% rise. "The data for February should display small increases in both the core and non-core components. We expect both non-energy industrial goods and services inflation rates to increase slightly which should raise the core rate from 1.2% to 1.3% year-on-year," the French bank said.
Alongside the consumer price index, the UK retail price index and producer price index also are being released at the same time.
Elsewhere, manufacturing, services and composite Purchasing Manager's indices from Germany and the eurozone are due at 0830 GMT and 0900 GMT, respectively. ZEW survey data from Germany and the eurozone are expected at 1000 GMT.
As for the US, 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.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 1.9%, reopening after a holiday Monday due to the Vernal Equinox Day celebrations.
Japan's manufacturing activity deteriorated for the first time in eleven months in March, the latest flash survey from Markit Economics showed. The Markit/Nikkei Manufacturing PMI fell to 49.1 in March from 50.1 in the previous month. Economists had expected the index to rise to 50.5. A score below 50 indicates contraction, while any score above 50 suggests expansion in the sector. The index remained below 50 neutral mark for the first time since April 2015.
In China, the Shanghai Composite ended down 0.6%, while the Hang Seng index in Hong Kong is down 0.2%.
In New York, the DJIA and the S&P 500 both ended up 0.1%, reaching their highest levels so far in 2016, while the Nasdaq Composite closed up 0.3%.
By Daniel Ruiz; danielruiz@alliancenews.com
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