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London stocks dip as Spain quarantine hits travel shares

By Sagarika Jaisinghani and Susan Mathew

July 27 – UK shares slipped on Monday as a two-week quarantine on all travellers from Spain hammered travel and leisure stocks, while a rally in miners helped the blue-chip index cut some session losses.

A 5.9% plunge for British Airways-owner IAG saw the stock mark its worst day in a month, while London-listed shares of Europe’s biggest holiday company, TUI AG, tumbled 11.4% after it decided to cancel all holidays to mainland Spain through Aug. 9.

EasyJet and Carnival were also among the biggest decliners on the FTSE 250, with the wider travel and leisure sector losing 2.9%.

The mid-cap index was off 0.6% with Britain saying it is also closely watching rises in coronavirus cases in other European destinations such as France and Germany.

“(This) raises the potential for earnings estimates to be downgraded once again for travel-related industries … and effectively derails their strategy for clawing back some of the losses experienced earlier this year,” said Russ Mould, investment director at AJ Bell.

With the relentless surge in global coronavirus infections raising the spectre of another round of lockdowns, investors are betting on more government and central bank stimulus to blunt the business damage from the pandemic.

Simmering U.S.-China tensions also sparked a flight from risk assets.

Asia-focused lenders HSBC and Standard Chartered fell 3.2% and 1.2%, respectively, after China took over the premises of the U.S. consulate in the city of Chengdu on Monday, after ordering that the facility be vacated in retaliation for China’s ouster last week from its consulate in Houston.

But the blue-chip FTSE 100 index, which fell as much as 0.6%, closed down 0.3%, as miners rallied after gold prices scaled all-time highs, while copper prices also rose.

Antofagasta climbed 3.6% after a contract deal with a workers’ union at its Zaldivar copper mine in Chile averted the risk of a walk-off..

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel)

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