The attack of nerves in the airlines sector hardened yesterday after Goldman Sachs cut earnings estimates for a clutch of US carriers.
Lufthansa was a notable faller ahead of tomorrow's six-month results. The group, which announced weak July traffic figures on Friday, was hit by talk that it was set to reduce profit targets for the full year.
Shrinking demand on longer-haul flights, courtesy of the slowing global economy, high fuel costs and competition from "no-frills" rivals on European routes have steadily lowered valuations among established airlines. Lufthansa fell 8.2 per cent to 16.15 a fresh low for the year and KLM 3.3 per cent to 16.20. Air France shed 3.3 per cent at 18.09. Austrian Airlines, which also reports tomorrow, fell 5.9 per cent to 10.50.
Motor stocks, buoyed through the early part of the year by currency weakness and demand for old economy defensive merits, had another mixed session. Although the rally for the euro combined with last week's profits warning from Ford have lowered sector valuations, investors remain uncertain about the outlook.
Volkswagen came off 1.5 per cent at 48.54 and Peugeot 2.3 per cent at 51.80. BMW, up 0.7 per cent at 35.10, bucked the trend and so did DaimlerChrysler, adding 2 per cent to 48.64 after JP Morgan emphasised the shares' longer-term potential.
"We continue to find DaimlerChrysler one of the most attractive stocks in the sector, primarily because we believe the Chrysler restructuring is progressing faster than most believe," says Morgan.
Luxury goods group Swatch crashed to the bottom of the FTSE Eurotop 300 index following six-month results that fell short of broker expectations. The group added to the uncertainty by cutting full-year sales targets. The registered shares fell 7.6 per cent to a fresh low for the year of SFr28.15.
