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* FTSE 100 index falls 0.3 percent
* Airlines down after Air France profit warning
* Marks & Spencer gains after update
By Atul Prakash
LONDON, July 8 (Reuters) - Britain's top share index fellfor a second straight session on Tuesday, with airline stocksunder pressure after Air France KLM issued a profitwarning.
Air France-KLM said its 2014 profits could be as much as 12percent lower than previously predicted, mainly as a result ofovercapacity and resulting weak prices in both the passenger andcargo sectors.
London-listed International Consolidated Airlines Group fell 4.3 percent, the worst performing FTSE 100 stock in percentage terms, while low-cost airline easyJet dropped 2.9 percent. Air France shares in Frankfurt fell5.1 percent.
"The profit warning just before the busy summer months forthe airlines sector has dampened investors' sentiment. It's aconfirmation that generally the last three months had beendifficult for the sector," Tom Robertson, senior trader atAccendo Markets, said.
"If there isn't a pick up over the next few months, then itwould mean that there is something fundamentally wrong."
The FTSE 100 index was down 0.3 percent at 6,801.38 pointsby 0824 GMT after falling 0.6 percent in the previous session.The index, which climbed to a one-week high this week, hasgained only 1 percent so far this year.
Tuesday's losses in the market were capped by a rise inminers following a sector update by Barclays. Rio Tinto rose 1.3 percent, the top FTSE gainer, after Barclays raised itsstance on the miner to "overweight" from "equal weight" andhiked its price target to 3,600 pence from 3,350 pence.
"We continue to favour base metal exposure over iron ore inparticular on mid- to long-term basis. However there is a strongchance, if we're right about macro conditions, that we could seea bounce in the iron ore equities, which are all trading onmaterial discounts to the sector. So, on a six months basis, weare upgrading Rio Tinto," Barclays said.
Among other movers, Marks & Spencer rose 1 percent.Britain's biggest clothing retailer reported its 12th straightquarterly fall in its clothing, footwear and homeware division,hurt by the transition to a new website, but its sales were notas bad as analysts had feared.
"Against a backdrop of low expectation, M&S appears to haveoffered some hope. An increased focus on profit margin generatespotential longer term optimism, with General Merchandise salesno worse than forecast," Keith Bowman, equity analyst atHargreaves Lansdown Stockbrokers, said.
"Key Womenswear sales have grown, while a recent improvementin online sales, despite previously flagged difficulties,provides some relief." (Reporting by Atul Prakash; Editing by Sophie Walker)
