Shares of U.S. airlines suffered their biggest drop in three months on Tuesday as the broader stock fell as investors fled to safer investments and took profits after a run-up in airline shares.
The Arca Airline index fell 5.3 percent, the largest one-day largest tumble for the index since Feb. 4. The broader S&P 500 index fell 2.4 percent in early afternoon trading.
"It is a continuation of the flight to safety, as people are scared a credit contagion could spread from Greece to other debt-laden countries," Morningstar airline analyst Basili Alukos said.
Shares of United Airlines parent UAL Corp. and Continental Airlines fell more than 9 percent in early afternoon trading. The two carriers announced Monday that they would merge to create the world's largest airline after three weeks of confidential talks.
"It's buy on rumor, sell on news," said Jesup & Lamont analyst Helane Becker.
US Airways Group fell 6.6 percent on the New York Stock Exchange to $6.90.
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