By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- The U.K.'s benchmark stock index fell
sharply on Monday, as worries about a volcanic eruption in Iceland
hit the travel sector and energy shares dropped with oil
prices.
The FTSE 100 index sank 112.60 points, or 1.9%, to end at
5,835.89. Other European markets sold off on a renewed bout of
sovereign-debt worries.
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.
Shares of International Consolidated Airlines Group SA tumbled
5.1% and those of TUI Travel PLC fell 3.2%.
Away from the main index, shares of easyJet PLC slumped 4.9%.
The airline 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 Wolseley PLC dropped 4% after the firm was downgraded
to hold from buy at Deutsche Bank.
"Wolseley remains a long-term attractive story due to the low
levels of current U.S. housing activity, however, we feel that
better buying opportunities may arise," the broker said in a
note.
Wolseley is a specialist trade distributor of plumbing and
heating products to professional contractors and a supplier of
building materials.
Miners fall sharply
Shares of resources stocks put London's benchmark index under
pressure. Among miners, heavyweights Anglo American PLC and Rio
Tinto PLC (RIO) fell 4.1% and 2%, respectively.
In the oil sector, shares of heavyweight Royal Dutch Shell
(RDSA) fell 2.3% and rival BP PLC (BP) lost 1.7%.
In the financial sector, shares of Old Mutual PLC dropped 3.8%,
and Admiral Group PLC slumped 3.6%.
Among banks, HSBC Holdings PLC (HBC) skidded 1.3% and Lloyds
Banking Group PLC lost 1.4%.
Shares of interdealer broker ICAP PLC slipped 0.5%, 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.