Airlines rally as FTSE rebounds off 5-1/2 month lows

Reuters

Published Jul 01, 2015 11:28

Airlines rally as FTSE rebounds off 5-1/2 month lows

By Sudip Kar-Gupta

LONDON (Reuters) - Britain's top equity index bounced back from five-and-a-half month lows on Wednesday, lifted by airline stocks that were boosted by lower oil prices and a recommendation for a new runway at London's Heathrow airport.

London and other European stock markets got a further boost after the Financial Times reported Greek Prime Minister Alexis Tsipras had written to international creditors saying Greece was prepared to accept a bailout offer published on June 28, provided several conditions were changed.

But the continued uncertainty over Greece -- which overnight became the first developed economy to default on a loan from the International Monetary Fund (IMF) -- kept the UK market well below its 2015 highs.

"I have been looking to sell out on any rallies for a profit given that the Greek situation remains volatile," said Beaufort Securities' sales trader Basil Petrides.

The blue-chip FTSE 100 index (FTSE) was up by 1.5 percent at 6,615.45 points -- still about 7 percent below a record high of 7,122.74 points reached in late April.

Airlines were among the best performers. EasyJet (L:EZJ) rose 3.2 percent while British Airways' owner International Consolidated Airlines Group (IAG) (L:ICAG) advanced 1.8 percent.

Airline shares were boosted as oil prices fell on the back of record new production levels and after a government-appointed commission said Britain should build a third runway at Heathrow airport.

"Improving capacity at Heathrow will definitely help those stocks, while the lower oil price is giving them a further lift," said Securequity sales trader Jawaid Afsar, who added he had recently bought shares in easyJet and IAG.

Among stocks losing ground, Speedy Hire (L:SDY) -- which is outside the FTSE 100 index -- slumped 30 percent after issuing a profit warning and announcing the departure of its chief executive.

In spite of the FTSE's rebound, which followed a 2 percent drop on Tuesday that sent the FTSE down to its lowest level since mid-January, many traders remained cautious given the uncertainty over Greece.