Iseq heavyweight Ryanair dragged the benchmark Irish stock market index lower on Thursday morning after rival Easyjet reported weak quarterly sales and warned on headwinds from terrorist attacks and Brexit.

Ryanair, which makes up more than 16 per cent of the Iseq, dropped 2.5 per cent to €11.36, making it the worst performer on the index, which itself was down 0.5 per cent. The broader European market was slightly higher, with the Stoxx 600 up 0.1 per cent, as investors awaited the outcome today of the European Central Bank’s first policy review since the Brexit referendum.

Easyjet outlined a "very challenging outlook," said Davy analyst Stephen Furlong in a note, adding that while he cut his earnings forecasts for the UK company after it updated markets on trading immediately after the UK vote, further earnings downgrades are in store.

Easyjet said earlier that sales in its fiscal third quarter ended June 30 fell 2.6 per cent to £1.2 billion (€1.44 billion). Revenue per seat, or yields, slid 8.3 per cent and are so far down about 7.5 per cent in the fiscal fourth quarter.

Terrorism incidents across Europe and North Africa since last year have deterred tourists and business executives from travelling, while a deadly attack in Nice, France, and a failed coup in Turkey in the past week have exacerbated the drop.

EasyJet, which was betting on the region's summer vacation season to revive traffic, is also contending with a plunge in the pound resulting from the British referendum last month to exit the EU.

Goodbody Stockbrokers analyst Mark Simpson said Easyjet's "unusual" decision not to issue full-year pretax profit guidance "highlights the fluid environment that the airline is facing at this moment in time."