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Europe: Shares weighed down by IAG and Restaurant Group
[LONDON] European shares fell on Friday to register their biggest weekly drop in more than two months, with travel and leisure stocks among the top losers after updates from British Airways owner IAG and Restaurant Group.
The STOXX Europe 600 Travel and Leisure index fell 2.3 per cent, putting pressure on the broader market.
British Airways-owner IAG fell 4.7 per cent. It said it would moderate its capacity expansion in the short term in response to weaker overall demand, despite reporting a forecast-beating rise in first-quarter profit.
Britain's Restaurant Group, which operates chains such as Chiquito and Frankie & Benny's, slumped 26.5 per cent after warning on full-year profit outlook.
The bank sector index fell 3.2 per cent with Royal Bank of Scotland and Bankia down 6 per cent and 3.6 per cent respectively after both lenders reported lower profits.
"Weaker earnings are starting to become a problem," Philippe Gijsels, head of research at BNP Paribas Fortis, said.
"Companies that disappoint are being punished disproportionately while those that surprise on the positive side shoot up, indicating that markets are nervous and have little patience with underperformance," he added.
The pan-European FTSEurofirst 300, which hit a three-month high last week, fell 2.2 per cent. It has fallen 2.1 per cent this week, its biggest weekly loss since mid-February.
Shares in Swiss money manager GAM, Swedish engineering group Sandvik and German airline group Lufthansa fell between 4.6 and 5.6 per cent as their shares traded without the attraction of latest dividend payouts.
French drugmaker Sanofi fell 5.3 per cent after Medivation's board rejected its unsolicited US$9.3 billion takeover proposal, saying the offer undervalued the company and its pipeline of oncology drugs.
On the positive side, Danish wind turbine maker Vestas rose 4.5 per cent, the top gainer in the FTSEurofirst 300 index, after posting a stronger-than-expected first-quarter operating profit before special items and maintaining its 2016 forecasts.