Travel Shares Lead Europe Selloff After Downing of Russian Jet

European Stocks Decline on Warplane Shooting
  • Stoxx Europe 600 Index slides the most in almost two weeks
  • Altice tumbles as Goldman Sachs sells shares to fund trade

Bearish sentiment engulfed Europe’s stocks for a second day after Turkey’s military shot down a Russian jet, marking the first direct clash between foreign powers embroiled in the Syrian civil war.

The Stoxx Europe 600 Index fell the most in almost two weeks, with 510 of its shares dropping. The downing of the aircraft took place as investors started to question a recent rebound in equities amid a slump in commodities and potential U.S. interest-rate increase.

“You can see sentiment heading towards a risk-off type attitude,” said Jasper Lawler, a London-based market analyst at CMC Markets Plc. “Perhaps we were looking for some reasons for a pullback and as that happened concerns have picked up over the general state of security. The whole business with the jet has fueled the uncertainty.”

The Stoxx 600 slid 1.2 percent at the close of trading in London, paring a drop of as much as 2 percent. Russian President Vladimir Putin accused Turkey of being accomplices of terrorism for shooting down the warplane, while Turkey said the pilots ignored repeated warnings that it was violating the nation’s airspace. Hotel operator Accor SA, Air France-KLM Group and Deutsche Lufthansa AG all dropped more than 3.8 percent.

Travel shares fall the most after downing of Russian jet.
Travel shares fall the most after downing of Russian jet.

Bearish sentiment is taking over after the benchmark gauge for European equities pulled off a 13 percent rebound from its low in September to a three-month high at the end of last week. Investors grew more optimistic on speculation the European Central Bank will add to its stimulus program and that higher U.S. interest rates won’t hamper growth. Traders are placing a 74 percent chance that the Federal Reserve will act next month.

Yet the optimism didn’t last. The Stoxx 600 had its biggest slide in more than a week on Monday, amid declines in metals that dragged commodity producers lower. The gauge closed today 9.3 percent below its record in April, paring its annual advance to 9.7 percent.

Altice NV tumbled 9.4 percent as Goldman Sachs Group Inc. sold shares to fund an options transaction with billionaire Patrick Drahi. Zodiac Aerospace sank 7.7 percent after its 2016 operating profit margin forecast was lower than analyst estimates implied. LVMH Moet Hennessy Louis Vuitton SE lost 4.3 percent and Cie. Financiere Richemont SA dropped 3.1 percent after Nomura Holdings Inc. said consensus estimates for the luxury-goods industry in 2016 may be too high.

Volkswagen AG was one of the few European shares that climbed. It advanced 5.5 percent after winning approval to repair most of its rigged European diesel engines. Glencore Plc added 3.9 percent as commodities rebounded. A Stoxx 600 gauge tracking energy companies was the only one that advanced today.

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