Foiled Terror Plot Hurts Airline Shares

However, analysts said the longer-term outlook was not as pessimistic as was feared after last year's July 7 bombings on London's transport network that killed 52 commuters.

"You will always see a selloff based on the headlines today, but investors and analysts will now be waiting to see the depth of issues," said Henk Potts, equity strategist at Barclays Stockbrokers.

Holger Schmieding, an analyst with Bank of America in London, said vacationers and business travelers were unlikely to change their travel and spending habits by enough to hurt the economy for long.

"We do not expect the thwarted terror plot to affect economic and financial market trends in any significant way," he said.

Elliott Frisby, a spokesman for VisitBritain, the country's tourism authority, said it was too early to estimate the impact but noted that Britain still had a record year in number of visitors last year despite the London bombings.

Meanwhile, many travelers headed to the railroads in Europe. Eurostar Group Ltd. spokesman Gareth Headon said the company's train service across the English Channel had carried 10 percent more passengers than usual Thursday and was likely to grow.

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