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Sunday 18th of April 2010
April 16, 2010    

Iceland eruption sends British Airways, other airlines lower

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by Elaine Frei
Iceland eruption sends British Airways, other airlines lower

European equities markets were lower Friday as flights were delayed and airports were closed due to an as cloud from the eruption of a volcano in Iceland, and after banks declined on the news that the US Securities and Exchange Commission has charged Goldman Sachs Group (NYSE: GS) with fraud and US consumer sentiment was at its lowest in five months according to a new survey.

Air travel delays and airport closures related to the eruption in Iceland sent shares of British Airways (LSE: BAY) down 3.13 percent while Air France (Euronext: AF) dropped 3.4 percent and Lufthansa (FWB: LHA) fell 4.1 percent, while Fraport AG (FWB: FRAG), which operates Frankfurt International Airport and other, smaller airports, dropped 2.3 percent.

The FTSE 100 was 1.39 percent lower to 5,743.96 in London, while the FTSE 250 was down 0.87 percent to 10,447.83.

Royal Bank of Scotland (LSE: RBS) added 5.11 percent for the best performance of the session in London after positive broker comment from Bank of America Merrill Lynch, but other banks were lower, including a decline of 2.56 percent for Barclays Bank (LSE: BARC) on the news that the SEC has accused Goldman Sachs of civil fraud in relation to activities revolving around mortgage investments.

Goldman Sachs has denied the charges.

The biggest decline in London came from engineering IT software provider Aveva Group (LSE: AVV), which dropped 6.56 percent on the 250, while the worst performance on the 100 came from IT group Autoonomy Corporation (LSE: AU), which dropped 5.95 percent on a forecast that its first quarter results will match analyst estimates.

All London miners were lower on the session, taking four of the top five spots on the 100’s list of decliners, led by Xstrata (LSE: XTA), which fell 4.37 percent for the worst performance in the sector.

The FTSE Eurofirst 300 was down 1.58 percent to 1,094.61 while the Dax fell 1.76 percent to 6,180.9, the CAC-40 was 1.94 percent lower to 3,986.63 and the IBEX dropped 2.29 percent to 11,259.7.

There were only four gainers on the Dax, while only two stocks gained on the CAC-40.

Most of the energy sector was lower, but oil and gas construction and engineering group Lamprell (LSE: LAM) added 3.36 percent to lead gainers on the 250.

Markets in the Asia-Pacific region were lower on the session, with declines coming after China raised the down-payment ratios for purchase of some homes in order to reduce speculation and cool down its economy, which expanded by more than 11 percent in the first quarter.

China Overseas Land & Investment Ltd (SEHK: 688) dropped 4.8 percent in Hong Kong trade, while Guangzhou R&F Properties (SEHK: 2777) was down 4.6 percent after the move.

Also hurting the markets was new data from the US Labor Department showing that new unemployment claims in the United States took a surprise jump last week.

The Nikkei 225 was down 1.52 percent to 11,102.18 in Tokyo, while the Topix index fell 1.01 percent to 988.84 and the Mothers market was 0.37 percent lower to 494.94.

Japanese companies with ties to China were hit by the moves there to control growth, with construction machinery manufacturer Komatsu (TYO: 6301), which counts China as its fastest-growing market, fell 1.3 percent.

Sharp Corp (TYO: 6753), which is trying to grow its mobile-phone market share in China, was down 1.8 percent.

Companies that rely on US sales were also lower as Honda Motor (TYO: 7267), which sees 44 percent of its sales in North America, was down 1.4 percent, while electronics giant Sony (TYO: 6758) dropped 1.8 percent.

Commodities-related shares, meanwhile, dropped on lower prices for oil and metals.

Elsewhere in the region, the Sensex fell 0.27 percent to 17,591.18 in India while the StraitsTimes Index was down 0.32 percent to 3,007.19 in Singapore.

Australia markets fell, with the Sydney Ordinaries dropping 0.33 percent to 5,007.3 while the S&P/ASX200 was down 0.34 percent to 4,984.7.

South Korea’s Kospi was 0.54 percent lower to 1,734.49, the Taiex was down 0.74 percent to 8,111.57 in Taiwan, the Shanghai Composite fell 1.1 percent to 3,130.3 and the Hang Seng dropped 1.32 percent to 21,865.26 in Hong Kong.

New York markets were down significantly in midday trade as the Dow Jones Industrial Average fell 1.34 percent to 10,995.24 while at the same time the S&P 500 had dropped 1.79 percent to 1,189.97 and the Nasdaq Composite was 1.58 percent lower to 2,475.95.

Crude oil prices were lower as West Texas Intermediate crude was over $2.50 per barrel lower at midday in New York, while metals prices were also lower.

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