LONDON MARKETS: U.K.'s FTSE 100 Ends Lower As Turkey Worries Hit Travel Industry's Stocks

By Victor Reklaitis, MarketWatch

TUI, Thomas Cook shares lose ground

The U.K.'s main stock index closed in negative territory Monday, joining a global downdraft that has been attributed to worries about Turkey's precarious financial condition.

Travel-related shares with exposure to Ankara were among the worst performers.

How markets are performing

The FTSE 100 fell 0.3% to end at 7,642.45, after tumbling 1% on Friday (http://www.marketwatch.com/story/ftse-100-pulled-down-as-turkey-contagion-concerns-grow-2018-08-10) as concerns over Turkey escalated.

The British blue-chip gauge is showing a drop of 0.6%, for the year to date.

The pound was buying $1.2762, down slightly from $1.2771 late Friday in New York.

What's moving markets

Stocks in the U.K. and the rest of Europe have been selling off on fears about potential contagion from Turkey's problems, especially in the banking sector.

The country's central bank on Monday made policy moves (http://www.marketwatch.com/story/turkeys-central-bank-fails-to-soothe-investors-2018-08-13) that failed to alleviate concerns among investors. It pledged to provide "all the liquidity the banks need" in a statement. It also said banks would be able to borrow foreign-exchange deposits from the central bank at a one-month maturity and one-week maturities.

Analysts said Turkey's reluctance to raise interest rates stood out.

See:Turkish lira hits fresh low as Erdogan's currency crisis echoes through markets (http://www.marketwatch.com/story/turkish-lira-hits-fresh-low-as-erdogans-currency-crisis-echoes-through-stock-markets-2018-08-12)

What are strategists saying?

"The central bank has said it will take 'all necessary measures' to ensure financial stability and will take steps to ensure liquidity is provided. But in stopping short of actually raising rates, we must question if the central bank has the arsenal to combat this currency rout and avoid a financial crisis in Turkey," said Neil Wilson, chief market analyst for Markets.com, in a note.

"As well as banks, we note that travel and tourism stocks with exposure to Turkey, like Thomas Cook, TUI and easyJet, were among the heavier fallers today," Wilson added.

Stocks in focus

Shares in TUI AG finished down 2.9%, while easyJet PLC (EZJ.LN) managed to shake off early losses, ending higher by 0.1%.

Over on the mid-cap FTSE 250, Thomas Cook Group PLC's stock (TCG.LN) closed down by 2.5%.

Shares in Paddy Power Betfair PLC dropped 1.9% after the gambling company was downgraded to sell from neutral by Citigroup analysts, who reportedly cited factors such as disappointment with its online business and its Australian unit.

(END) Dow Jones Newswires

August 13, 2018 12:12 ET (16:12 GMT)

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