By Julie MacIntosh NEW YORK, July 24 (Reuters) - Shares of the largest U.S. airlines dropped on Wednesday while the broader market rallied, as apprehensive investors again steered away from the loss-plagued sector. The Standard & Poor's Airlines Index (GSPAIR) dropped nearly 6 percent to hit a new 52-week low on Wednesday, led by a steep dive in United Airlines parent UAL Corp.'s stock, Analysts said investors were spooked by continued financial deficits at the U.S. air carriers and fears that recent stock market plunges or another attack on the United States could crush travel demand further. "We think investors are nervous about holding this sector in the days leading up to September 11, the anniversary of the terrorist attack," said Credit Suisse First Boston analyst James Higgins. "I don't see it getting better any time soon." Shares of United parent UAL Corp. (UAL) helped lead the slide, dropping more than 11 percent to a new 52-week low of $4.70. In just over one year, UAL's share price has plunged more than 86 percent since hitting its one-year high of $35.17 on Aug. 1, 2001. Delta Air Lines (DAL) shares fell 3 percent to $13.52 at mid-afternoon on the New York Stock Exchange, Continental Airlines' (CAL) stock slipped 1.5 percent to $9.90, and Northwest Airlines (NWAC) shares dropped 4.5 percent to $8.12 on Nasdaq. Demand for air travel failed to grow for the third straight month in June, and airlines have been forced to offset whatever revenue declines they can with cost-cutting and capacity reductions, Lehman Brothers analyst Gary Chase said. "We no longer expect any meaningful recovery in pricing prospects during 2002," Chase said. Leading U.S. airlines have tried repeatedly -- and failed -- to raise airfares and bring in more revenue. In a move that some industry watchers said seemed counterintuitive, most of the nation's air carriers late last week expanded upon an initiative started by US Airways Group (U) that cut some fares as much as 40 or 50 percent. American Airlines challenged by spreading fare cuts across its entire route network, and United, Delta and Northwest followed with similar sales. The slashed fares could deepen airlines' losses -- but analysts said that in an industry where capacity and pricing are often based on the competition instead of actual demand, the mass fare cuts weren't surprising. Shares of American Airlines parent AMR Corp. (AMR) traded more than 2 percent lower at $9.97 on Wednesday after hitting a new 52-week low of $9.75. Southwest Airlines (LUV) shares dropped 4.5 percent to $11.12, also after hitting a new one-year low, while shares of America West Holdings (AWA) plunged 13 percent. ©2002 Reuters Limited.