FTSE falls as UK bomb plot hits markets, BA drops

LONDON, Aug 10 (Reuters) LONDON - UK stocks fell heavily on Thursday as news of foiled plans to blow up aircraft in mid-flight rattled markets, with shares in airline British Airways and other leisure stocks such as cruise operator Carnival particularly badly hit.

Outside of equity markets, UK gilts jumped as some investors bought into safe-haven assets and sterling fell.

A number of people were arrested in the London area, police said, and there were severe delays at London's Heathrow airport. Brussels airport cancelled all flights to London and Lufthansa cancelled all flights to the UK until 1200 GMT.

Shares in BA fell 5.1 percent, while Carnival lost 2.3 percent.

Smaller travel and leisure stocks were also hit, with mid-caps such as holiday firm MyTravel and no-frills carrier easyJet down over 4 percent each.

The FTSE 100 index of Britain's leading shares was down 75.7 points, or 1.3 percent, at 5,784.8 by 0717 GMT. The drop was mirrored across Europe, with the FTSEurofirst 300 down 1.3 percent as well, while further pressure came from an overnight drop on Wall Street.

''Obviously this is a very rude awakening. I think people had a list of concerns about the economy, interest rates and currencies but this is a sudden new overlay which will have people stopping to think,'' said one trader.

Corporate news also weighed on some stocks, with Vodafone off 3 percent after German peer Deutsche Telekom issued a surprise profit warning and said it was no longer growing in its home market.

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