Formed from the merger of BA and Spain's Iberia, the company made its debut back in January but has lost over 40 per cent of its share price since then. Yesterday it was knocked again after Espirito Santo initiated coverage with a "sell" recommendation, saying that the airlines were in for a spell of turbulence.
Suggesting that "the market is starting to assume a renewed economic downturn", the broker's analyst Gerald Khoo warned that premium class traffic – a "key profit driver for the network airlines" – was closely linked to both GDP and world trade growth. He added that as a result he preferred the budget airlines, although easyJet still slipped 19.4p to 310.3p.
IAG's fall accelerated during the session as the market turned downwards, and it eventually closed 10.2p worse off at 152p. Traders blamed its pension deficit, with one saying any sharp drop in equities was a double blow for the group given the fact its scheme is believed to be one of the most heavily exposed to the equity markets.
After three consecutive sessions in the blue, the FTSE 100 started poorly in the wake of disappointing speeches late on Thursday in the United States from Federal Reserve Chairman Ben Bernanke – who refused to give any further hints on the possibility of a third round of quantitative easing – and President Obama.
The real damage was done in the afternoon, however, thanks to the resignation of the European Central Bank chief economist Jürgen Stark and vague rumours of an upcoming Greek default. Despite reports claiming Greece's government had denied the latter, the benchmark index fell as low as 5,202.24 points before finishing 125.73 points behind at 5,214.65.
The banks were particularly bad ahead of Monday's report from the Independent Commission on Banking, with Barclays shifting down 15p to 144p while Lloyds and Royal Bank of Scotland dropped 1.86p to 31.04p and 1.24p to 21.5p respectively.
This was despite some much-needed support from Evolution Securities' Ian Gordon, although he was hardly gushing in his praise. Calling RBS "a dog" and saying Lloyds "appears to be the most challenged UK bank", the analyst still recommended both stocks, as well as Barclays, as a "buy" thanks to their valuation.
The lack of appetite for risk meant the usual defensive stocks were dominating the leaderboard. The notable exception was Tullow Oil, however, which spurted up 186p, or 15.16 per cent, to 1,413p. Rumours earlier in the week that an update from its French Guiana operations was imminent were proved right in dramatic fashion as the explorer announced it had struck oil in its Zaedyus well in the region.
Royal Bank of Scotland called it a "game-changing" find for the company, and the news was making waves on the Alternative Investment Market as well, where Wessex Exploration and Northern Petroleum – both of which have a 2.5 per cent stake in the well – jumped up 2.68p to 7.5p and 21p to 93p respectively.
Elsewhere, BP was knocked back 10.5p to 378p in the wake of the energy giant's Russian TNK-BP joint venture revealing an internal anti-corruption drive had identified 365 cases.
After taking a hit from Ofcom announcing earlier in the week it was launching a probe into the motor insurance sector, Admiral was on the slide again as the government revealed it was banning referral fees in personal injury claims.
The car insurer retreated 57p to 1,307p, despite saying the fees only make a small contribution to its profits, while Aviva dipped 18.1p to 302.7p.
Down on the FTSE 250, Charter International climbed 20p to 804p amid vague speculation the US group Colfax will soon unveil an offer for the tool manufacturer, after it had revealed it was "in preliminary discussions" last Sunday. Before that, the buyout vehicle Melrose – 1p worse off at 280p – had raised its offer for Charter to 850p a share, gaining access to its books as a result.
Online grocer Ocado was driven up 5.1p to 113.6p thanks to an upgrade of its rating by UBS to "buy" from "neutral". Some in the City have suggested recently that the group may need to raise more funds through the markets, but the broker said that Ocado has "adequate financing flexibility and... [therefore] more equity issuance is unlikely."
On aim, an increase in its estimates for its West Medvezhye block in Siberia saw Victoria Oil & Gas jump up 0.25p to 3.98p. Meanwhile, Roxi Petroleum was pegged back 1p to 3.98p – a move of over 20 per cent – after announcing on Thursday it had no news behind its sharp share price rise earlier in the week, which was sparked by unfounded rumours that the company was about to unveil a major oil discovery.
FTSE 100 Risers
BSkyB 683.5p (up 14.5p, 2.17 per cent)
Advances as Citi keeps the broadcaster as one of its key media sector recommendations.
Imperial Tobacco 2,076p (up 16p, 0.78 per cent)
Cigarette manufacturer helped forwards by its attractiveness as a defensive stock.
Randgold Resources 7,070p (up 30p, 0.43 per cent)
Gold miner has now added nearly 13 per cent in the last 10 sessions.
FTSE 100 Fallers
Man Group 216.2p (down 12.9p, 5.63 per cent)
Asset manager dips despite Canaccord Genuity initiating coverage with a "buy" rating.
Glencore International 414p (down 22.5p, 5.15 per cent)
Commodities trader loses most of the gains it made on Thursday.
GKN 180.1p (down 8.1p, 4.3 per cent)
Engineer hit by RBC Capital downgrading its advice to "sector perform" from "outperform".
FTSE 250 Risers
Imagination Technologies 365.3p (up 20.3p, 5.88 per cent)
Chip designer has its "overweight" rating reiterated by JP Morgan Cazenove.
Pennon 672.5p (up 17.5p, 2.67 per cent)
Waste group advances as HSBC upgrades its advice to "overweight" from "neutral".
Betfair 707p (up 7p, 1 per cent)
World's largest betting exchange finishes in the blue for the fifth straight session.
FTSE 250 Fallers
Home Retail 106.8p (down 11p, 9.34 per cent)
Retailer has its rating cut to "sell" by Numis after its trading statement on Thursday.
Kesa Electricals 93p (down 4.25p, 4.37 per cent)
Comet owner dips ahead of its first-quarter interim management statement next week.
JD Wetherspoon 398p (down 18p, 4.33 per cent)
Pubs company falls back after its full-year, pre-tax profit drops 1.9 per cent.
Comments