LONDON MARKETS: FTSE 100 Slides To 2-month Low After Fed Hints At Rate Hike

By Sara Sjolin, MarketWatch

Thomas Cook slumps 17% after downbeat outlook, EgyptAir crash

U.K. stocks moved sharply lower on Thursday, after the U.S. Federal Reserve signaled an interest-rate increase in June is still on the table if the economy continues to improve.

A missing EgyptAir plane also hurt sentiment, dragging shares in travel operators and airlines lower.

The FTSE 100 index slid 1.3% to 6,087.22, setting it on track for the lowest close since March 10.

Mining companies topped the list of decliners, as a rising dollar (http://www.marketwatch.com/story/dollar-maintains-gains-after-hawkish-fed-minutes-2016-05-19) slammed metals prices lower (http://www.marketwatch.com/story/gold-prices-drop-as-interest-rate-rise-looks-more-likely-2016-05-19). Shares of Anglo American PLC (AAL.LN) dropped 6.1%, Fresnillo PLC (FRES.LN) lost 5.4%, and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) fell 5%.

The stronger dollar came after minutes from the U.S. Federal Open Market Committee's April meeting suggested policy makers are seriously considering a rate hike next month (http://www.marketwatch.com/story/most-on-fed-ready-to-hike-rates-in-june-if-economic-data-strong-minutes-show-2016-05-18). Ahead of the release of the minutes on Wednesday, futures prices had indicated a June rate hike was unlikely. But a 34% probability for a move is now priced in, according to the CME Group FedWatch tool.

Shares in travel operators and airlines were falling after an EgyptAir plane from Paris to Cairo went missing over the Mediterranean Sea with 66 people aboard. French President François Hollande told reporters Thursday that the plane had likely "crashed," (http://www.marketwatch.com/story/frances-hollande-says-information-suggests-crash-of-egyptair-flight-ms804-2016-05-19) according to the BBC.

TUI AG erased 2.6%, International Consolidated Airlines Group SA (IAG.LN) (IAG.LN) dropped 1%, and EasyJet PLC (EZJ.LN) gave up 1%.

Outside the FTSE 100 index, Thomas Cook Group PLC (TCG.LN) tumbled 17%, also driven lower by a downbeat outlook for the full-year (http://www.marketwatch.com/story/thomas-cook-sees-earnings-hit-from-turkey-demand-2016-05-19).

Other movers: Shares of Royal Mail PLC (RMG.LN) dropped 3.6% after the formerly nationalized U.K. postal service reported a fall in profit (http://www.marketwatch.com/story/royal-mail-profit-drops-on-restructuring-costs-2016-05-19) and said its outlook for the U.K.'s letter and parcel market trends remains unchanged.

Among few stocks trading in positive territory, 3i Group PLC (III.LN) rose 3% after the investment manager said assets under management rose 3.9% (http://www.marketwatch.com/story/3is-assets-under-management-rise-39-for-year-2016-05-19) during the fiscal year to end-March.

Pound rally: Sterling jumped to its highest level against the euro in more than three months after U.K. retail sales for April suggested concerns over the upcoming Brexit referendum may be fading. Sales jumped 4.3% on the year (http://www.marketwatch.com/story/uk-retail-sales-jump-43-on-year-in-april-2016-05-19) and 1.3% on the month, easily topping forecasts of a 2.4% and 0.5% rise, respectively.

The pound bought EUR1.3073, the highest level since Feb. 4.

Against the dollar, the pound rose to $1.4642, the strongest it has been in two weeks.

(END) Dow Jones Newswires

May 19, 2016 07:22 ET (11:22 GMT)

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