Banks drop as Italian election worries flare up
U.K. stocks closed in the red Tuesday, led lower in part by a slide for British Airways-parent International Consolidated Airlines Group SA following a computer glitch at the carrier over the holiday weekend.
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The FTSE 100 index dropped 0.3% to end at 7,526.51, suffering its first loss in four sessions. The London market was closed Monday due to a holiday.
IAG's stock (IAG.LN) (IAG.LN) was among the notable losers, closing down 1.4% after hundreds of BA flights were grounded due to a far-reaching failure (http://www.marketwatch.com/story/british-airways-travelers-suffer-delays-cancellations-owing-to-computer-glitch-2017-05-27) of the carrier's computer network. But the stock managed to finish off its session lows. Spanish-listed IAG shares (IAG.LN) rose 2.4%, but still were lower for the week-to-date after sliding 2.8% in Monday's session.
The airline said Tuesday it was back to a full schedule (http://www.marketwatch.com/story/british-airways-says-its-back-to-a-full-flight-schedule-2017-05-30) at London's Heathrow and Gatwick airports. The IT problems could cost British Airways around EUR100 million (http://www.marketwatch.com/story/the-bill-for-british-airwayss-it-carnage-111-million-citi-estimates-2017-05-29), or around $111 million, analysts at Citigroup estimated.
"Shares recovered somewhat by the afternoon since although there will be some lost revenue to compensate some passengers, the situation looks contained," said Jasper Lawler, senior market analyst at London Capital Group, in a note.
South Africa-based Mediclinic International PLC (MDC.LN) was the FTSE 100's biggest loser, closing down by 3.3%. The operator of hospitals and clinics lost ground as the South African rand fell following news that President Jacob Zuma had survived another revolt (https://www.wsj.com/articles/south-africas-zuma-survives-leadership-challenge-again-1496068496) against his leadership from within his own party.
Financial stocks also were adding pressure in London, tracking losses for their European counterparts amid fears of an early election in Italy. Italians will head to the polls no later than the spring of 2018, but Matteo Renzi, the leader of Italy's ruling centre-left Democratic Party, said in a weekend interview that it would make sense to have the vote in September, when a German election is also planned.
Shares of Barclays PLC (BCS) (BCS) fell 1.2%, and Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) slipped 0.9%. But HSBC Holdings PLC (HSBA.LN) (HSBA.LN) (HSBA.LN) finished roughly unchanged as earlier losses evaporated.
Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) dropped 0.4% after a group of investors on Monday accepted a GBP200 million settlement from the bank. The settlement ends a long legal fight over allegations RBS misled the investors in the run-up to the lender's government bailout during the financial crisis.
(END) Dow Jones Newswires
May 30, 2017 12:11 ET (16:11 GMT)