London pre-open: Stocks seen muted as Ryanair highlights second wave fears

London stocks were set for a muted open on Monday amid renewed concerns about the coronavirus pandemic as Ryanair warned over the impact of a second wave and after the UK put Spain back on the quarantine list.

The FTSE 100 was called to open 10 points higher at 6,134.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Sentiment remains fragile with mounting discomfort after the UK imposed two-week quarantine for travellers from Spain.

"Tourism and summer activities will certainly remain a risk to be considered for European investors if mild measures, such as social distancing and the obligation to wear masks, do not prevent cases from rising. Investors fear renewed lockdowns, although any confinement measures in the close future are expected to be selective rather than a general halt in economic activity."

Budget airline Ryanair posted a €185m loss for the three months to June but cautioned about the impact that a second wave of coronavirus infections might have even as it stood by plans to gradually resume flights.

"It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn, when the annual flu season commences, is our biggest fear right now," the company said.

Looking ahead, Ryanair said the trading year through March 2021 would be challenging, not least due to possible "adverse trading consequences" should the UK leave the European Union at the end of the year without a deal.

Elsewhere, Signature Aviation said like-for-like revenue in its first half was down 31% year-on-year due to the Covid-19 pandemic, although it did remain net cash flow positive in the second quarter.

The FTSE 250 aviation services company wasi flying activity was showing an improving trend, down by 32% in June in the US, compared to 77% in April.

It said it had now brought all US employees back from furlough, and had agreed a "precautionary" covenant waiver on its revolving credit facility for December 2020 and June 2021.