Barcelona Terror Attack, Trump Hit Risk Appetite

LONDON (Alliance News) - Stocks in London were lower on Friday at midday, with travel stocks leading the fallers following two terrorist attacks in Barcelona on Thursday, while sentiment was also dampened by weak trading in New York as investors seem to be losing patience with US President Donald Trump.

The FTSE 100 index was down 0.9%, or 69.19 points at 7,318.68. The mid-cap FTSE 250 index was down 0.9% at 19,601.03, and the AIM All-Share index was down 0.4% at 998.54.

The BATS UK 100 index was down 1.0% at 12,439.68. The BATS 250 was down 0.9% at 17,800.02. The BATS Small Companies was down 0.3% at 12,153.23.

Spanish police have arrested a third person in connection with the Barcelona terrorist attack that killed at least 13 people and injured more than 100 others on Thursday. The attacker struck a bustling commercial area of Barcelona popular with local and tourists, killing and injuring people of at least 20 nationalities, Catalonia authorities said.

It was unclear if the person arrested was the driver of the van who fled after ploughing into the busy Las Ramblas thoroughfare on Thursday evening. The man was taken into custody in the town of Ripoll, about 100 kilometres north of Barcelona, police said Friday.

Two people linked to the attack were arrested shortly after the vehicle rampage took place. Catalan police said one was a Moroccan and the other a Spanish national from the North African Spanish enclave of Melilla. Neither were known to have any previous links to terrorism.

The Islamic State group said via its affiliated Amaq news agency that its "soldiers" were responsible for the attack.

Hours after the first incident, police said they killed five alleged terrorists who tried to mow down pedestrians in the Catalan resort town of Cambrils, about 100 kilometres south-west of Barcelona.

Local media said the attackers drove off after police tried to carry out a check, aiming at pedestrians as they went. The police gave chase, the vehicle then overturned and the men were shot dead as they tried to flee. The suspects were wearing fake explosives belts, Catalan police said on Twitter.

Tourism and travel-related stocks were heavily hit on Friday as investors digested the news from Spain.

International Consolidated Airlines Group was down 2.0%, while easyJet was 1.4% lower.

IAG - the owner of British Airways and Irish airline Aer Lingus - also owns Spanish carriers Iberia and Vueling, a low-cost airline based in Barcelona. IAG also owns Level, a low-cost long-haul airline, also based in the Spanish city.

FTSE 250-listed air carrier Wizz Air Holdings was down 2.3%, while Ryanair Holdings was down 1.6%

"Unsurprisingly we are seeing the airlines leading the FTSE 100 lower this morning. In London, Paris and now Barcelona, the terrorist attacks over recent years have taken place in the three most visited cities in Europe, with inevitable implications for numbers over the coming year. With Turkish tourism numbers finally coming back, the focus on top European cities will arguably be a bigger hit to low cost European carriers if people decide to stay away," said IG analyst Joshua Mahony.

InterContinental Hotels Group was down 1.4%. FTSE 250-listed transport firm National Express Group was down 2.1%, while fellow mid-cap travel operator Thomas Cook was down 1.5%.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were down 1.1% and 0.6%, respectively.

Stocks in the US were pointed for a marginally higher open on Friday, with the Dow Jones Industrial Average and the S&P 500 index seen flat, and the Nasdaq Composite pointed 0.1% higher.

The three major New York stock indices suffered heavy declines on Thursday, with the DJIA ending down 1.2%, the S&P down 1.5% and the Nasdaq down 1.9%.

"The optimism of this week appears to have faded, with the prospect of an even tougher environment for Donald Trump bringing into doubt the likeliness of any tangible policies in the near future," noted IG's Mahony.

"While the week started well, we are now seeing widespread selling for global stocks, with traders instead choosing to shift their focus towards the likes of gold and the yen. News that Trump has disbanded an industrial committee before it had even been full formed says it all, with businesses turning their back on the President en masse," the analyst said.

Trump has decided not to assemble an infrastructure advisory council as planned, US news reports said. The goal of the Advisory Council on Infrastructure was to advise Trump on his plan to propose spending billions of dollars upgrading roads, bridges, airports and other infrastructure.

Shares in Ashtead Group were down 1.9%. The equipment rental firm is greatly exposed to the US via its Sunbelt Rentals business.

The news came one day after Trump announced he was disbanding two other business advisory councils as several corporate chief executives resigned from them in protest over Trump's remarks on violence that broke out Saturday at a demonstration by white supremacists in Charlottesville, Virginia.

Gold was quoted at USD1,295.19 an ounce at midday, higher than USD1,284.32 an ounce at the London equities close on Thursday. FTSE 100-listed Randgold Resources was the biggest blue-chip gainer, up 1.1%.

RSA Insurance was another gainer in the FTSE 100, up 1.2%, after RBC Capital upgraded the firm to Outperform from Sector Perform.

Still in the economic calendar on Friday, in the US, the Michigan consumer sentiment index is at 1500 BST, while the Baker Hughes oil rig count is at 1800 BST.

Released earlier in the day, Data from Destatis showed German producer prices for industrial products advanced 2.3% year-on-year in July, slightly weaker than the 2.4% increase seen in June. This was the weakest since December, when prices gained 1%. Economists had forecast 2.2% annual increase.

Month-on-month, producer prices gained 0.2% after staying flat in June. Prices were forecast to remain unchanged in July.

The euro area current account surplus declined to the lowest in nearly three years in June, the European Central Bank said. The current account surplus fell to EUR21.2 billion in June from EUR30.5 billion in May. This was the lowest level since August 2014.

The surplus on trade in goods rose to EUR27.4 billion in June from EUR 26.6 billion. Meanwhile, the surplus on services declined to EUR2.2 billion from EUR2.7 billion.