FTSE 100 Benchmark Declines for Second Day; British Airways, EasyJet Drop

U.K. stocks declined for a second day, led by airlines and travel companies as the ash cloud emanating from an Icelandic volcano closed parts of Europe’s airspace for a fifth consecutive day.

British Airways Plc, Europe’s third-biggest carrier, EasyJet Plc, TUI Travel Plc and Thomas Cook Group Plc all retreated. Kazakhmys Plc and Antofagasta Plc fell more than 1.5 percent as metals dropped.

The benchmark FTSE 100 Index decreased 16.05, or 0.3 percent, to 5,727.91. The FTSE All-Share Index lost 0.3 percent, while Ireland’s ISEQ Index dropped 0.3 percent.

“Equities are approaching the stage where they could be vulnerable to a more substantial short-term correction,” David Shairp, global strategist at JPMorgan Asset Management in London, wrote in a report to clients today. “The case for risk assets has become finely balanced.”

The FTSE 100 remains 5.8 percent higher this year after the European Union agreed a $61 billion aid package to help Greece tackle the region’s biggest budget deficit and the U.S. Federal Reserve pledged to maintain record-low interest rates for an extended period to secure the economic recovery. Shairp says his team remains “overweight” equities and expects them to outperform bonds, according to today’s report.

BA, EasyJet

British Airways fell 1.4 percent to 231.7 pence after saying it sees about 15 to 20 million pounds per day in lost revenue from the volcanic ash cloud disruption, together with costs incurred from supporting passengers. EasyJet declined 1 percent to 473 pence, while Ryanair Holdings Plc retreated 4.1 percent to 3.729 euros.

As many as 63,000 flights have been canceled after the April 14 eruption at the Eyjafjallajökull volcano spewed dust across Europe, causing airports from Dublin to Moscow to shutter. U.K. airspace will remain restricted until at least 1:00 a.m. tomorrow, flight-control authority National Air Traffic Services said.

The combined daily loss in revenue for EasyJet, Ryanair, BA, Air-France KLM Group, Deutsche Lufthansa AG and Iberia Lineas Aereas de Espana SA is now about 120 million euros ($161 million) to 140 million euros a day, UBS AG analysts wrote in a report to clients today.

TUI Travel fell 1.2 percent to 288.2 pence. The company said as of yesterday it had about 100,000 customers who are unable to return home from vacations following closure of northern European airports. Thomas Cook, Europe’s second- biggest tour operator, dropped 1.6 percent to 256.9 pence.

Mining Companies

Kazakhmys, Kazakhstan’s biggest copper miner, dropped 1.6 percent to 1,474 pence and Antofagasta retreated 1.7 percent to 983 pence. Copper slid for a third day in London as investors shied away from riskier assets after U.S. regulators sued Goldman Sachs for alleged fraud.

Royal Bank of Scotland Group Plc gained 4.4 percent to 50.4 pence, rising for a fourth day. The bank is weighing whether to sue Goldman Sachs Group Inc. for an $800 million loss tied to a structured debt product, the Financial Times reported, without citing anyone for the information.

Arriva Plc rallied 3.3 percent to 760.5 pence after confirming it is in “advanced discussion” with Deutsche Bahn AG, Germany’s state railway, about a possible cash offer of 775 pence per share.

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Adam Haigh in London at ahaigh1@bloomberg.net.

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