* FTSE 100 down 0.6 pct
* Airlines top fallers; RBC cuts easyJet target price
* Analysts reckon index will consolidate near-term
By Tricia Wright
LONDON, May 15 Britain's top shares dropped on
Thursday, led down by airlines, as investors bet on a period of
consolidation for the FTSE 100 after it set a 14-year high
earlier in the day.
Profit-taking continued for shares of British Airways owner
IAG and easyJet. Both airlines have jumped
around 40 percent in the last 12 months, and investors have been
cashing in the gains.
Traders said an elevated oil price was partly to blame for
the declines, with Brent crude at around two-and-a-half-week
highs above $110 a barrel. For a table of jet fuel hedging
RBC cut its target price for easyJet, to 1,750 pence
from 1,800 pence, highlighting the difficulties easyJet set out
in its results statement in forecasting passenger behaviour this
summer, when people's holiday dates might be based on whether
their team was still in the World Cup soccer competition.
EasyJet led the market lower, down 6.6 percent, followed by
IAG, 5.8 percent weaker.
The blue-chip FTSE 100 index was down 44.14 points,
or 0.6 percent, at 6,834.35 points by 1508 GMT. Earlier in the
session, it had climbed to 6,894.88, the highest level since
December 1999, when it set a record high of 6,950.60 points.
The pullback seen in airlines underscored concerns about the
outlook for share prices more broadly.
Lofty valuations are stopping investors from putting more
money to work in equities. The FTSE 100 is trading on a 12-month
forward price/earnings ratio of 13.7 times, against its 10-year
average of 11.7 times, Thomson Reuters Datastream shows.
"We were at a 14-year high on not very much, really, so I
just think it's a little bit of weariness," said Peel Hunt
equity strategist Ian Williams.
Williams reckoned the UK benchmark will trade around current
levels until at least mid-year, enabling earnings to catch up
after what has proved a lacklustre corporate results season.
With 84 percent of the reporting season wrapped up, 50
percent of STOXX Europe 600 companies have missed
analyst forecasts, StarMine data showed.
"(Investors are still concerned about) valuations versus
underlying earnings... That will remain the case until we get a
better bottom-up earnings story which won't happen till H1
reports are out the way really," Williams said.
(Additional reporting by Atul Prakash; Editing by Larry King)