Steel stocks took a beating as disappointing results from Usinor and the threat of import restrictions in the important US market sparked profit-taking.
Usinor's first quarter figures made it clear that the demand cycle for steel, far from showing broad resilience, is looking visibly rocky. The French group's trading statement coincided with a warning from President George W Bush that the US may begin to impose steel import quotas.
Against market talk of widespread downgrades for the stock, Usinor fell 7.7 per cent to #13.47 for a two-day decline of 9.1 per cent. Other leading stocks were dragged lower. Thyssen Krupp lost 2.6 per cent at #17.11 and Corus 10 per cent at #1.08.
Arbed and Aceralia, Usinor's partners in a planned three-way merger, fell 8.1 per cent to #123.20 and 6.2 per cent to #14.45 respectively. Ahead of tomorrow's results statement, VA Stahl shed 0.6 per cent at #33.
Having tracked crude oil prices higher over the past couple of sessions, oil stocks ran into a flurry of selling as negative news on US energy inventories caused investors to lock in profits.
Crude prices, which pushed higher on Monday and Tuesday on an Iraqi halt to oil exports, spun lower on overnight news that US stocks showed an unexpected bulge, according to weekly figures from the American Petroleum Institute.
In Europe, Brent Blend, the North Sea benchmark, came off sharply, sliding close to $29 a barrel and pushing leading shares lower. Total Fina came off 2.5 per cent at #175.10 and Royal Dutch 1.3 per cent at #72.10.
Weak May traffic figures from British Airways and KLM made for a mixed session in the airlines sector. KLM's load factor in May fell steeply year-on-year while at BA premium class business last month fell to its lowest level for five years.
KLM descends KLM gave up 0.9 per cent at #22.20 and Air France 0.5 per cent to #21.40. But Swissair added 2.2 per cent at SFr139 and Lufthansa, buoyed by hopes for a breakthrough in its pilots' dispute, 2.4 per cent at #22.23.
Pernod Ricard bounced 3.6 per cent to #84.35 on disposal news. The drinks leader announced that it was "close" to finalising the sale of its Orangina soft drinks operations for about 700 million.
Groupe Bruxelles Lambert ran into profit-taking after racing ahead to #71.50 at the opening. The stock has been boosted by news of sweeping reorganisation plans at German media group Bertelsmann, in which GBL has a 25 per cent stake. It finished up 2.9 per cent at #69.85 for a two-day gain of 4.7 per cent.
