* 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 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
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
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
"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)