By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- The U.K.'s benchmark stock index fell
sharply on Monday, as a volcanic eruption in Iceland hit the travel
sector, while energy shares dropped with oil prices.
The FTSE 100 index fell 1.5% to 5,857.28 in late afternoon
trading.
Other European markets sold off on a renewed bout of
sovereign-debt worries.
Those worries also spread to U.S. stocks, which fell sharply on
Wall Street.
Shares of resources stocks were putting London's key index under
pressure. Among miners, heavyweights Anglo American PLC and Rio
Tinto PLC (RIO) fell 3.7% and 1.8%, respectively.
Antofagasta PLC dropped 3.2% and Kazakhmys PLC shed nearly 3% as
well.
In the oil sector, shares of heavyweight Royal Dutch Shell
(RDSA) fell 1.8% as rival BP PLC (BP) lost 1.1%. Shares of Tullow
Oil PLC dropped 3.3%, BG Group PLC lost 3% and Essar Energy PLC
fell 2.7%.
In the financial sector, shares of Old Mutual PLC dropped 3.8%,
and Admiral Group PLC slumped 4.6%. Among banks, HSBC Holdings PLC
(HBC) skidded 1% and Lloyds Banking Group PLC lost 1.1%.
Airline and travel-related stocks tumbled on worries that an ash
cloud from a volcanic eruption in Iceland could reach parts of the
U.K. on Tuesday. Last year, the eruption of an Icelandic volcano
caused widespread chaos, shutting down European airspace for
days.
TUI Travel PLC fell 2.6%, while International Consolidated
Airlines Group SA sank 4.1%.
Away from the main index, shares of easyJet PLC tumbled 3.9%.
The company said that David Michels, deputy chairman and senior
independent director, will step down from the board at the end of
2011 and that easyJet would begin looking for a successor.
Shares of interdealer broker Icap PLC slipped 0.3%, even after
Credit Suisse upgraded it to outperform from underperform, saying a
20% drop in the share price in recent months was overdone and
created a buying opportunity.