European stocks end lower on terrorism fear

LONDON (AP) - European markets ended lower Thursday, as Deutsche Telekom's reduced earnings outlook pressured the telecom sector and as renewed terrorism fears hit airline stocks. 

The U.K. FTSE 100 index lost 0.6 percent to 5,823, the German DAX Xetra 30 index declined 1.3 percent to 5,630 and the French CAC-40 index fell 1 percent to 4,976.  

But markets finished off the day's lows after U.S. markets shook off early losses. 

Travel and telecom stocks led the decline after U.K. authorities said they arrested 21 people in connection to a plot to blow up airplanes flying between the U.K. and the U.S. 

Analysts said the terror plot news added pressure to already uncertain markets. Mark Tinker, head of strategy at U.K. brokerage Execution added that the market has generally been lacking in confidence and news such as Thursday's detentions provides an excuse for investors to stay away. 

"It's undoubtedly caught people off guard, everyone's looking at the airlines of course,'' Tinker said. 

London-listed airlines lost ground, with British Airlines down 5.1 percent, easyJet 2.1 percent lower and Ryanair down 1.5 percent. 

The travel sector rout spilled over, with Spanish construction group Ferrovial, which has agreed to buy Heathrow and Gatwick airport operator BAA, down 1.2 percent and German airline Deutsche Lufthansa down 3.3 percent. 

Travel company TUI lost 4.1 percent and Air France-KLM declined 3 percent. 

Both companies also updated investors on progress Thursday, with TUI posting a sharply lower profit in the second quarter and warning that 2006 earnings at its shipping division will fall below last year's, while Air France posted a quarterly sales rise of almost 12 percent. 

Deutsche Telecom lost 7.5 percent after Europe's largest telecommunications company said its quarterly profit dropped 14 percent on weak domestic fixed-line operations and cut its profit outlook for the next two years. 

Peers in Europe also declined. Telecom Italia declined 2.8 percent in Milan and mobile operator Vodafone Group dropped 3.9 percent in London. 

Dutch and Belgian financial heavyweights ING, Fortis and Aegon announced a solid set of results Thursday, but shares had a mixed day as investors focused on varied outlooks for future performance. 

ING Group lost 0.3 percent, insurer Aegon NV rose 0.6 percent and Fortis rose 2.6 percent in Amsterdam. 

Shares in Swedish security services company Securitas AB dropped over 11 percent after it reported that second-quarter net income dropped 53 percent and said it will list - not sell - its cash-handling business Loomis.  

It also said that its chief executive, Thomas Berglund, will resign from the company and revised its earnings outlook to include further charges. 

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