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London market in red amid EasyJet struggles

Published 21/07/2016

The FTSE 100 Index was down 20.66 points to 6,708.1
The FTSE 100 Index was down 20.66 points to 6,708.1

The London market was in the red after the European Central Bank (ECB) said it would hand the eurozone a dose of stimulus if the Brexit vote began to hamper economic growth.

The FTSE 100 Index was 29.1 points lower at 6699.89 after ECB president Mario Draghi said Britain's exit from the European Union had weakened the eurozone's outlook as the Bank kept interest rates on hold.

The ECB update came as London's premier index was led back below the 6,700 mark by budget airline easyJet, which saw its shares slump after it admitted to facing the most difficult summer holiday season for years.

Shares were down 5% or 60p to 1067p after the low-cost carrier said it has been forced to slash fares, which are down by more than 5% year on year, to boost demand, while costs have surged after the pound has fallen around 10% since the UK's decision to leave the EU.

Boss Carolyn McCall said the pound's plunge after the Brexit vote had seen a £40 million currency swing against the group, while holidaymaker confidence has also been impacted by sterling's weakness as well as last week's massacre in Nice and the attempted coup in popular sun-seeker destination Turkey.

The pound struggled to hold onto gains early in the session, slipping 0.1% against the dollar to 1.321 US dollars and down 0.2% against the euro to 1.199 euros, despite strong government borrowing figures for the UK.

Chancellor Philip Hammond said there was "underlying strength" in the British economy as government borrowing fell to its lowest level in June since 2007.

The Office for National Statistics (ONS) said public sector net borrowing excluding public sector banks hit £7.8 billion last month, down £2.2 billion compared to last year and below economists expectations of £9.5 billion.

However, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that despite June's figures, the Government's efforts to repair the public finances have been "disappointingly slow".

He added: "The Government is estimated to have borrowed £75.3 billion in 2015/16, exceeding the OBR's forecast by £3 billion.

"Meanwhile, overshoots in April and May mean that borrowing in the first three months of 2016/17 has been only 8.3% lower than in the previous year. Borrowing therefore is on course to overshoot the OBR's forecast of £55.5 billion by around £14 billion."

Across Europe, Germany's Dax was 0.1% higher and the Cac 40 in France was marginally down.

In stocks, London-listed miners bounced back from a fall in the previous session to sit among the biggest risers.

Glencore was up 6.8p to 182.9p, Antofagasta rose 12.3p to 495.2p and Anglo American climbed 13.3p to 787.7p.

Betting firm William Hill was more than 10% up after announcing that its chief executive was stepping down after the firm was hit by profit warnings and sliding sales under his tenure.

James Henderson leaves the business immediately after just two years in charge, with chief financial officer Philip Bowcock taking the helm until a permanent CEO is appointed.

Shares were up 29.2p to 304.3p.

The biggest risers on the FTSE 100 Index were Ashtead Group up 57p to 1185p, Glencore up 6.8p to 182.9p, Antofagasta up 12.3p to 495.2p, Anglo American up 13.3p to 787.7p.

The biggest fallers were easyJet, down 60p to 1067p, Sky down 32.5p to 867p, IAG down 15.1p to 405.6p and Next down 139p to 4896p.

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