LONDON MARKETS: FTSE 100 Ends Lower, But Carnival, EasyJet Post Sharp Gains

By Sara Sjolin and Victor Reklaitis, MarketWatch Features Dow Jones Newswires

British pound rises to 2-month high versus euro

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U.K. stocks on Tuesday closed lower for a second straight session, with analysts saying an escalating war of words between the U.S. and North Korea helped push investors out of risky assets.

But Carnival PLC and easyJet PLC were among the day's gainers, helped by better-than-expected earnings and acquisition-related buzz, respectively.

The FTSE 100 index fell 0.2% to end at 7,285.74, building on a 0.1% loss from Monday (http://www.marketwatch.com/story/ftse-100-under-pressure-as-european-political-uncertainty-lifts-the-pound-2017-09-25).

Late in Monday's session, North Korea's foreign minister claimed the U.S. had declared war on the isolated state (http://www.marketwatch.com/story/north-korean-official-says-us-has-declared-war-2017-09-25-13103598), leaving Pyongyang with "every right to make countermeasures." That includes the right to shoot down U.S. strategic bombers, the foreign minister said.

The claim "may seem ludicrous, however, the claim that they reserved the right to shoot down U.S. bombers in international airspace should be taken seriously as the North Koreans do have form in this area for provocation," said Michael Hewson, chief markets analyst at CMC Markets UK, in a note.

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U.K. stocks on Tuesday were also hurt by strength in the pound, which rallied to its highest level against the euro since July. Sterling rose as high EUR1.1423, and it was recently around EUR1.1402, up from EUR1.1367 late Monday in New York. But against the dollar, the pound traded at $1.3419, down from $1.3469 on Monday, as earlier gains evaporated.

As most profit for FTSE 100 companies is made overseas, a higher pound can squeeze earnings when converted back into the U.K. currency.

Multinational companies were among the biggest decliners in Tuesday's dealings. Shares of Rolls-Royce Holdings PLC (RR.LN) (RR.LN) fell 1.1%, while Burberry Group PLC (BRBY.LN) (BRBY.LN) gave up 1.4%.

On the upside, Carnival (CCL.LN) (CCL) finished 2.7% higher for the FTSE 100's second-biggest gain after the cruise operator's earnings and revenue topped forecasts (http://www.marketwatch.com/story/carnival-shares-rise-after-earnings-and-revenue-beat-expectations-2017-09-26).

Shares in easyJet (EZJ.LN) rose 1.6% for the third-biggest rise as the discount airline appeared to benefit from expectations that it's benefiting from Air Berlin's bankruptcy.

"EasyJet shares rose as much as 3.2% on Tuesday as discussions over the purchase of some insolvent Air Berlin assets reportedly gathered pace," said Ken Odeluga, market analyst at City Index, in a note.

"If easyJet succeeds in buying some Air Berlin assets--it has bid for 27-30 planes according to reports--we think its shares could maintain momentum both as a recovery play and on speculation that profit could exceed guidance," he added.

NMC Health PLC (NMC.LN) closed 2.8% higher for the FTSE's largest advance as the health-care provider announced regulatory OKs for a facility in Saudi Arabia.

Meanwhile, shares of Informa PLC (INF.LN) lost 0.8% after the events and publishing company said it has taken over open access publisher Dove Medical Press for an undisclosed sum (http://www.marketwatch.com/story/informa-in-deal-to-buy-dove-medical-press-2017-09-26).

(END) Dow Jones Newswires

September 26, 2017 12:33 ET (16:33 GMT)