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Fuel price fears push easyJet down further

EASYJET'S recent share slide continued as concerns mounted over the impact of rising oil prices and over-capacity in the European airline market.

The low-cost carrier was more than six per cent lower in a session in which the FTSE 100 Index maintained its recent uncertain streak with a fall of 13.8 points to 6743.9.

There was little impetus from the latest inflation figures for the eurozone, with an unchanged figure of 0.5 per cent doing little to banish fears of a deflationary spiral.

European policymakers are meeting this week but are unlikely to announce any new initiatives after their June meeting cut interest rates from 0.25 per cent to 0.15 per cent in an effort to revive the continent's moribund economy. The pound held firm against the euro at 1.25 as new lending figures from the Bank of England showed signs that the housing market is cooling down of its own accord.

Some 61,707 mortgages worth £10 billion got the go-ahead in May, 19 per cent below January's peak of nearly 76,000.

The pound continued to strengthen against the US dollar, with sterling once more registering its highest level since October 2008, at 1.71.

The biggest fall in the FTSE 100 Index came from easyJet as shares in the airline continue to slip back from the recent high seen in April.

A downgrade from Bank of America Merrill Lynch caused the latest sell-off, with the broker cutting its recommendation to 'underperform' and lowering its price target to 1150p from 1800p.

The sector has been spooked by an upward trend for fuel costs and a recent profits warning from Lufthansa which warned about the impact on fares from over-capacity on its European routes. Shares were 94p lower at 1365p, while rival International Airlines Group was 13.3p lower at 370.5p.

Drinks group Diageo bucked the weaker market to rise one per cent, or 18.5p, to 1866p on speculation of a possible tie-up with beer giant SAB Miller. The two have previously looked at linking up. SAB Miller was up 22p, or 0.65 per cent, at 3388p.

Elsewhere on the fallers board, shares in Sports Direct International were down more than two per cent - off 17p to 706.5p - after it was forced to deny that it planned a takeover offer for shoe retailer Office.

It was a mixed day for the retail sector, with Debenhams ahead 1.2p to 68.5p but SuperGroup down 12p to 1056p.

Marks & Spencer also fell 6.7p to 425.2p after broker Shore Capital warned that next week's trading update was unlikely to show a shift in momentum in the company's turnaround plans.

The biggest FTSE 100 risers were Fresnillo up 17p at 872p, Pearson up 19p at 1154p and Aberdeen Asset Management up 6.5p at 453.9p. The biggest fallers were easyJet down 94p at 1365p, International Airlines Group down 13.3p at 370.5p and Sports Direct International down 17p at 706.5p.

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