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Egypt unrest hits FTSE

Published 01/31/2011, 04:12 AM
Updated 01/31/2011, 04:16 AM
LCO
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* FTSE down 1 percent, Egypt unrest hits investor confidence

* Travel firms fall on travel disruption, higher oil price

* Only four risers early on London's blue chip index

By David Brett

LONDON, Jan 31 (Reuters) - Britain's leading shares extended their previous session's sell-off on Monday as political unrest in Egypt hit investor sentiment, with travel firms among the top fallers, dented by the travel disruption and higher oil prices.

By 0852 GMT, the FTSE 100 index was down 55.86 points, or 1 percent, at 5,825.51, having closed down 1.4 percent at 5,881.37 on Friday.

The political protests in Egypt, which have claimed the lives of more than 100 people, entered a sixth day on Monday, with protestors camped out in central Cairo vowing to stay until they had toppled President Hosni Mubarak.

"The Egypt situation is adding to the fragility of sentiment that we have seen around the European debt situation, Chinese inflation and the reporting season in the U.S., which has been reasonably mixed," Richard Hunter, head of UK equities at Hargreaves Lansdown, said.

Travel firms were among the worst hit on London's blue chip index, with traders citing the travel disruption caused by the protests and the rising price of oil.

Tour operator TUI Travel and International Consolidated Airlines Group, the company formed by the merger of British Airways and Iberia, each shed 2.8 percent.

On the second tier, Thomas Cook was down 5.4 percent.

"Egypt has been a successful destination for tourists, and though Egypt and Tunisia combined would account for only 10 percent of travel operators' earnings, they are being hit by risk aversion," said Matthias Desmarais, head of leisure and services at Exane BNP Paribas in Paris.

Banks and miners were sharp fallers as the uncertainty in the Middle East reduced appetite for risk.

OIL CHOKED UP

The events in Egypt have pushed Brent oil futures to nearly $100 a barrel.

"There are some concerns that the oil supply could be disrupted as a lot of it, about a million barrels a day, travels through the Suez Canal," Hargreaves Lansdown's Hunter said.

Integrated oil stocks were lower, with oil majors BG Group and BP down 1.1 and 0.4 percent, respectively.

There were also concerns over BP's dividend, as Russian shareholders in its TNK joint venture convene to consider withholding the $1.8 billion payment.

Royal Dutch Shell, however, limped up 0.1 percent, helped by an upgrade to "outperform" from "neutral" by Credit Suisse.

Elsewhere, International Power, which was bought by GDF Suez after the French firm won EU regulatory approval on Wednesday, fell 1.2 percent as Credit Suisse cut its recommendation to "underperform" from "outperform".

There is no major British economic data due for release on Monday. (Editing by Will Waterman)

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