Travel sector losses push London market into red

British Airways, TUI Travel and Thomas Cook all lost around 4 per cent at one point yesterday, but narrowed their falls amid news that flights in Scotland and northern England will resume today.

The FTSE 100 Index shed 16.05 points to 5727.91 by the close in the latest falls after its 1.4 per cent plummet on Friday following shock fraud charges against investment bank Goldman Sachs from the US regulator.

Wall Street's Dow Jones Industrial Average was almost flat in early trading as better-than-expected profits from Citigroup helped to soothe nerves from the Goldman scandal.

A gauge of the US economy's prospects rose more strongly than expected to a record high in March, pointing to a steady economic recovery, a private research group said.

The Conference Board said its index of leading economic indicators increased 1.4 per cent, rising for the 12th straight month, after an upwardly revised 0.4 per cent gain in February.

Analysts had expected a 1.0 per cent rise in March from a previously reported 0.1 per cent gain.

In currency news, the pound was largely flat against the dollar at 1.52 and against the euro at 1.13 amid ongoing uncertainty surrounding the General Election and the possibility of a hung Parliament.

Meanwhile, the continuing travel disruption caused by the Icelandic volcano eruption caused worries over lower demand for jet fuel, helping to send oil prices down to 81 US dollars a barrel.

In London, British Airways ended the day in a better position having pared earlier losses.

Shares fell 31/4p to 2313/4p – or 1.4 per cent – after it said that lost passenger and freight revenue, as well as costs incurred in supporting passengers, amounted to between 15m and 20m a day.

TUI Travel saw a similar effect, ending 31/2p down at 2881/4p, or 1.2 per cent, after it said the disruption had cost it around 20m so far and a further 5m a day while the problems persist. Thomas Cook said lost income and additional costs meant it was losing around 7m a day. Shares declined 1.6 per cent, or 41/4p to 2567/8p.

Banks experienced a mixed session, having been sent reeling by Friday's shock charges against Goldman by the SEC.

Royal Bank of Scotland – the only blue chip bank not to have been affected last week – was up another 4 per cent, or 21/8p higher at 503/8p, as it continued to benefit from positive broker coverage, leaving the taxpayer's stake around the break-even mark.

Lloyds Banking Group, in which the taxpayer has a 41 per cent stake, is meanwhile trading above the 63.2p entry price for the Government's 27.6bn investment. Shares were 3/4p higher at 653/8p.

The rest of the sector was under pressure, with Barclays down 27/8p to 3701/2p and HSBC off 7p to 691p.

Elsewhere, shares in bus and rail firm Arriva were 24p higher at 7601/2p as it confirmed it was on the brink of a more than 1.5m takeover deal from German public transport giant Deutsche Bahn.

EasyJet moved in the opposite direction in the FTSE 250 Index, dropping 43/4p to 473p, although this 1 per cent fall represented a smaller decline than the 4 per cent seen earlier in the session.

Frankie & Benny's and Garfunkel's operator Restaurant Group fell 47/8p to close at 2351/8p as it has a number of its sites at UK airports.

The biggest Footsie riser was RBS.