French nuclear faults send gas prices to new record, but Omicron-affected shares gain on investor hopes

Travel-related shares fare better on hopes that restrictions will be short-lived, but EDF's discovery has sent gas prices soaring

A cooling tower and the two reactors of the nuclear power plant of Civaux, seen behind a colza field, in Civaux, central France. Picture: Guillaume Souvant/AFP via Getty Images

The price of wholesale gas reached a new record after faults were found at a French nuclear reactor but there was better news for airline and travel shares in Ireland and across the rest of Europe, as investors reassess the possible economic fallout despite the spread of the Omicron variant. 

French power giant EDF found faults at a nuclear power station and shut down another plant using the same kind of reactors, leading to a jump in the cost of wholesale gas which has increasingly been used to generate electricity amid the Europe-wide energy shortages this winter. EDF shares plunged.

The price of gas on the Dutch TTF contract had been climbing steadily this week towards its all time recent high reached in early October. On Thursday, the contract rose a further 1% to €134 per kilowatt per hour following the news from France.

Probe by safety watchdog

France's nuclear safety authority said EDF had informed it that the company had detected cracks due to corrosion on the pipes of a reactor at the Civaux power plant in western France.

It said EDF, which has extended the outage of its Civaux station as a result and also stopped the Chooz plant in eastern France as it uses the same technology, was investigating to determine the cause of the faults. The watchdog will closely monitor EDF's review, it said.

Separately, the French Institute of Radiological Protection and Nuclear Safety, another public agency, said checks on other EDF reactors were likely to be necessary. 

France's biggest electricity supplier said having the Civaux and Chooz reactors offline would result in a loss of about 1 Terawatt-hour by the end of 2021. 

JP Morgan Cazenove said the financial impact on EDF was likely to drag into next year.

Better news for travel shares

There was better news for a whole range of airline and hotel shares which have long been indicators of the fears and hopes of investors about the economic path of the Covid pandemic. 

Shares in IAG, which owns Aer Lingus, British Airways, Iberia, and Vueling, rose 2% while Ryanair shares gained 1.5% on hopes any new European restrictions caused by Omicron would be short-lived. Ryanair cut some seat capacity for the coming months. Dalata, the owner Maldron and Clayton owner and Ireland's largest hotelier, were little changed. TUI, Europe's largest travel firm, gained 1%. 

• Additional reporting Reuters