Europe: Shares fall, Barcelona attack weakens travel stocks

[LONDON] European travel stocks fell sharply on Friday after the van attack in tourist hotspot Barcelona.

Investors were also increasingly concerned about the stability of the Trump administration.

As a global share sell-off spread, the pan-European STOXX 600 ended the session 0.7 per cent lower, with blue-chips down 0.4 per cent. All European sectors were in the red.

Travel and leisure stocks led losses, down 1.5 per cent, with airlines the worst-performing as investors dropped stocks exposed to tourist flows.

Ryanair, easyjet and British Airways owner IAG recouped some earlier losses but still closed 0.8 to 2 per cent lower.

Spanish airport company AENA fell around 2 per cent after Thursday's attack, in which a suspected Islamist militant drove a van into crowds in central Barcelona, killing 13 people.

Spanish stocks were 0.6 per cent lower, with shares in Melia Hotels and IAG's Madrid-listed shares among the biggest fallers. "As we've seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings," said Neil Wilson, analyst at ETX Capital.

Risky assets, including equities, were hit globally on concerns that US President Donald Trump might not be able to deliver on his campaign promises including tax cuts after disbanding two high-profile business advisory councils.

Though company news was thin on the ground, earnings drove some moves.

Dutch storage firm Vopak fell more than 9 per cent after it said profit would be 5 to 10 per cent lower this year than last due to lower occupancy rates.

Irish construction firm Kingspan Group jumped 9.6 per cent after it reported its trading profit grew 6 per cent in the first half and said the Brexit vote had not had a measurable impact on UK business.

Shares in German generic drugmaker Stada were the biggest gainers, surging more than 13 percent to a record high after the second, improved buyout offer from private equity group Bain Capital and Cinven was successful.

Meanwhile Straumann, the top gainer on Thursday after a profit beat, fell back 3.7 per cent as investors moderated their enthusiasm.

The European earnings season is drawing to a close, with 86 per cent of second-quarter company reports through.

Some 60 per cent of these have beaten or met expectations and earnings estimates were trending up, though they were still negative overall after being revised down sharply since the start of earnings season due to concerns about a stronger euro.

"In contrast to the pattern of the last several years in which earnings have routinely disappointed lofty analyst expectations, this year analysts have been overly bearish and earnings have surprised to the upside," said Jon Ingram, portfolio manager at JP Morgan Asset Management.

REUTERS