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EasyJet slump leaves FTSE grounded

EasyJet slump leaves FTSE grounded

A slump in the share price of EasyJet (EZJ) following a broker downgrade held back the FTSE 100.

The UK blue-chip index traded four points, or 0.1%, higher at 6,762, with Shire (SHP)  rising 1% to £46.14 after the Financial Times reported AbbVie (ABBV.K) chief executive Richard Gonzalez would this week fly to London in a bid to convince shareholders over a proposed £27 billion takeover.

Shire has rejected three AbbVie bids since May and said the latest £46.26-per-share offer ‘fundamentally undervalued’ the company.

Shire has also received a tax boost from the Canadian authorities, announcing it had received a $248 million cash refund, and expected a further $162 million later in the year.

EasyJet was the biggest faller, dropping 6% to £13.71 after analysts at Bank of America Merrill Lynch downgraded the stock from ‘neutral’ to ‘underperform’.

‘We believe the consensus earnings-per-share upgrade story is over at EasyJet, as negative yield momentum will cause confidence in the upgrade cycle to shatter,’ the analysts said.

Sports Direct International (SPD) was another faller, dropping 2.4% to 706p after the group dismissed reports it was considering a bid for footwear retailer Office.

‘Notwithstanding recent speculation, Sports Direct confirms that it is not considering an offer to acquire Office,’ it said in a statement to the market. ‘Such speculation is unhelpful to the customers, staff, suppliers and other stakeholders of both companies.’

Outside the FTSE 100, shares in ‘small cap’ stock Mecom Group (MEC) rocketed 32.2% to 152p after the Belgian media group De Persgroep struck a £196 million deal to buy the European newspaper group.

FTSE 250 stock Henderson Group (HGGH) inched 0.5% to 237.5p after the asset management group announced the acquisition of US fund group Geneva Capital for up to $200 million. Analysts at Barclays said the buy fitted with Henderson’s plans to expand in the US and was ‘fairly priced’ but ‘not cheap’.

The oil price drifted below $113 per barrel, with Brent crude falling 0.6% to 112.6p, as fears of disruptions to supply caused by the fighting in Iraq continued to subside. Government forces have launched a pushback against the Sunni militant insurgency.

But the geopolitical tensions helped to maintain the gold price at elevated levels. Gold traded at $1,313.40 an ounce, near a two-month high of $1,325.90 hit last week.

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