British Airways fell 6 per cent to 219.25p after both Deutsche Bank and ABN Amro cut their rating on the airline to sell saying it would struggle to make any profit with fuel at its current high price.

Deutsche's Chris Reid said BA was not able to pass on the high costs to customers and that Willie Walsh must slash the size of his fleet: "We believe BA is losing its ability to price up while maintaining volumes. BA must resize its business or hope competitors resize theirs, until either scenario occurs we see only downside risks and so reduce our rating to Sell." He set a 200p price target on the airline.

"We believe the majority of BA’s network is now loss making," he added.

The Sunday Times revealed yesterday that chief executive Willie Walsh was preparing to ground some aircraft this winter, particularly the older less fuel-efficient models

New York’s main oil futures contract, light sweet crude for June delivery, was up 31 cents at $126.60 per barrel midmorning, having closed at a record high on Friday.

This helped boost BG Group, up 20p at £13.37, and Cairn Energy, up 1.3 per cent to £35.92.

Oil services firm Wood Group rose 1 per cent to 468.75p after it said it said it expects annual results to be ahead of market expectations. Credit Suisse lifted its target for the group to 490p from 475p.

Citigroup helped the mining sector with a big upgrade including buys on Anglo American, up 2.6 per cent to £36.65 and Vedanta Resources, up nearly 4 per cent to £25.56.

Kazakhmys was the top gainer, up 5.3 per cent to £19.31 after Credit Suisse's Jeremy Gray raised his target from £23 to £27 to reflect his increase in copper forecasts to $4 per pound on April 28.

He said the group's foray into power through their acquisition of the Ekibastuz power plant and its associated coal mine earlier this year "could prove a masterstroke going forward". It aims to increase the capacity of this power plant, increasing earnings from power ten fold by 2015.

"With copper selling off recently back to $8,340 per tonne we think the next move is up. Chinese consumers could be playing a dangerous game by destocking their stockpiles at the moment. Strike action may have ceased at Codelco but the risks are ever present." Copper supply is growing by only 1.9 per cent this year compared to demand rising by 3 to 4 per cent. "Kazakhmys is a cheap way to play a potential rally in prices."

Wolseley fell 2 per cent to 566p after Merrill Lynch downgraded it to sell from neutral. It said asset sales would not help solve the building material group's problems, since they would be taken badly by the market. But a rights issue would materially dilutive if it were to remove the risk that the company will breach its bank covenants.

Sainsbury fell to 366-1/2 as ING cut its stance to sell, following a raft of other analysts last week after it posted resutls with a weak outlook.

In the FTSE 250, Bradford & Bingley was the biggest faller, down 8 per cent at 121.75p as worries that many of its buy to let and self certified borrowers would default on mortgage payments.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive