UK's FTSE falls for 2nd day; Air France warning hits airlines
* FTSE 100 index falls 0.3 percent
* Airlines down after Air France profit warning
* Marks & Spencer gains after update
By Atul Prakash
LONDON, July 8 (Reuters) - Britain's top share index fell for a second straight session on Tuesday, with airline stocks under pressure after Air France KLM issued a profit warning.
Air France-KLM said its 2014 profits could be as much as 12 percent lower than previously predicted, mainly as a result of overcapacity and resulting weak prices in both the passenger and cargo sectors.
London-listed International Consolidated Airlines Group fell 4.3 percent, the worst performing FTSE 100 stock in percentage terms, while low-cost airline easyJet dropped 2.9 percent. Air France shares in Frankfurt fell 5.1 percent.
"The profit warning just before the busy summer months for the airlines sector has dampened investors' sentiment. It's a confirmation that generally the last three months had been difficult for the sector," Tom Robertson, senior trader at Accendo Markets, said.
"If there isn't a pick up over the next few months, then it would mean that there is something fundamentally wrong."
The FTSE 100 index was down 0.3 percent at 6,801.38 points by 0824 GMT after falling 0.6 percent in the previous session. The index, which climbed to a one-week high this week, has gained only 1 percent so far this year.
Tuesday's losses in the market were capped by a rise in miners following a sector update by Barclays. Rio Tinto rose 1.3 percent, the top FTSE gainer, after Barclays raised its stance on the miner to "overweight" from "equal weight" and hiked its price target to 3,600 pence from 3,350 pence.
"We continue to favour base metal exposure over iron ore in particular on mid- to long-term basis. However there is a strong chance, if we're right about macro conditions, that we could see a bounce in the iron ore equities, which are all trading on material discounts to the sector. So, on a six months basis, we are upgrading Rio Tinto," Barclays said.
Among other movers, Marks & Spencer rose 1 percent. Britain's biggest clothing retailer reported its 12th straight quarterly fall in its clothing, footwear and homeware division, hurt by the transition to a new website, but its sales were not as bad as analysts had feared.
"Against a backdrop of low expectation, M&S appears to have offered some hope. An increased focus on profit margin generates potential longer term optimism, with General Merchandise sales no worse than forecast," Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said.
"Key Womenswear sales have grown, while a recent improvement in online sales, despite previously flagged difficulties, provides some relief." (Reporting by Atul Prakash; Editing by Sophie Walker)
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