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FTSE 100 in retreat as airline warning deters investors

Published: 12:00 08 Jul 2014 EDT

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Hopes for new highs barely got off the ground on Tuesday as London’s blue chip were again in retreat.

Closing at a mid-price of 6,738 the FTSE 100 index was down 85 points or 1.25%.

Against a backdrop of negative headlines concerning safety and security, the airlines were hit hardest, by something decidedly more tangible – a profits warning from Air France-KLM. 

British Airways owner IAG (LON:IAG) and EasyJet (LON:EZJ) were among the top share index’s worst performers, with IAG off 7% and EasyJet down 5%.

Air France-KLM blamed increased long haul competition, weak cargo demand and certain forex related problems for its shortfall.

Whilst quarterly results from Marks & Spencer (LON:MKS) weren’t quite as bad as some feared, the food and clothing retailer moved 1.35% lower whilst chief executive Marc Bolland was grilled by shareholders at today’s AGM.

Like-for-like (LFL) food sales rose 1.7% year-on-year in the 13 weeks to 28 June, general merchandise (GM) sales were down 1.5%, in line with market expectations.

LFL clothing sales were down 0.6% on the same period of last year, partly as a result of the company protecting margins by offering fewer discounts, but womenswear, traditionally a strong area for M&S, saw a growth in sales.

City broker Investec remains a buyer, saying that there were encouraging underlying trends and the impacts associated with the new online platform and the move away from heavy promotional activity were as expected.

Among the small caps, investors are cashing out of Monitise (LON:MONI), the mobile banking and payments company, after a disappointing trading update.

The shares are down more than a third year to date and off 13.2% today, after it revealed full-year revenue growth in 2014 is expected to fall in the range of 31-33%, versus previous guidance of somewhere around 40%, largely because of a faster than expected shift in the customer base to a subscription-based model.

Unlike the licence-based model, where money is received upfront when the licence is sold, the subscription-based model relies on smaller, regular payments.

Media group Connect (LON:CNCT) is also getting a duffing over after a mixed interim management statement. Shares are down 7.6% at 175.25p, with the company saying the performance of its Books division will be below expectations, though the News & Media arm is tipped to perform better than expected.

On the sunnier aide of the street, Proteome (LONPRM) is up 12% at 37p after the publication of a study it co-authored with King’s College London in which a set of 10 proteins in the blood have been identified that can predict the onset of Alzheimer's disease.

"We are in the process of selecting commercial partners to combine the protein biomarkers in a blood test for the global market, a key step forward to deliver effective and early treatment for this crippling disease," said Proteome Science’s Dr Ian Pike, who co-authored the paper.

DekelOil (LON:DKL) jumped 8% its confirmed its palm oil mill in Côte d'Ivoire is in production and will have a direct impact on the bottom line as the business is already in the black.

Output for the three months to June – its first full quarter in operation – was 5,943 tonnes of crude palm oil (CPO) and 1,077 tonnes of kernels.

Telecoms services supplier Adept Telecom (LON:ADT) meanwhile celebrated its eleventh year of higher underlying profits by doubling its dividend sending its shares higher.

Leyshon Energy (LON:LEN) was on the advance, rising around 15%, as it began a testing programme on at its Chinese gas project.

Elsewhere, Petroceltic International (LON:PCI) reached a long awaited milestone with the completion of a farm-out deal with Algeria’s Sonatrach, to sell an 18% stake in the large Ain Tsila gas project. It delivers an immediate US$20mln cash boost, reduces capex demands and unlocks US$140mln of development ‘carry’.

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