* FTSE 100 down 0.9 pct
* Airlines down after Air France profit warning
* M&S falls after latest sales drop
* Slump in UK factory output also weighs on sentiment
By Sudip Kar-Gupta
LONDON, July 8 Britain's top equity index lost
ground on Tuesday as airline stocks such as International
Consolidated Airlines Group were hit by a profit
warning from Air France-KLM.
The blue-chip FTSE 100 index was down by 0.9
percent, or 63.13 points, at 6,760.38 points going into the
close of the trading session.
International Consolidated Airlines Group - the owner of
British Airways - slumped 7.9 percent after Air France-KLM's
profit warning, making ICAG the worst-performing FTSE 100 stock
in percentage terms.
Low-cost airline easyJet also fell 5.5 percent after
Air France-KLM warned that its 2014 profits could be as much as
12 percent lower than previously predicted because of
over-capacity and weak prices.
"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," said Accendo Markets' senior trader
Clothing and food retailer Marks & Spencer fell 1.4
percent after the company reported that first-quarter sales had
been held back by its transition to a new website.
M&S kept its full-year profit guidance, but many analysts
said the company remained under pressure, with its results on
Tuesday showing a 12th consecutive quarterly drop in overall
general merchandise sales.
"I think M&S has got its work cut out," said Beaufort
Securities sales trader Basil Petrides, who had sold M&S shares
in the run-up to Tuesday's business update.
Some traders said a surprise slump in UK factory output in
May was also putting pressure on the FTSE.
Previous rallies this year have failed to get the FTSE past
6,900 points, which is considered a necessary hurdle to jump
before it can move on to record highs.
"The UK data certainly has not helped. The FTSE just
continues to underwhelm", said Hantec Markets analyst Richard
(Additional reporting by Atul Prakash; Editing by Larry King
and Louise Heavens)