Market Report: Concerns over Egypt weigh on tour operators

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The ongoing political uncertainty in Egypt continued to worry investors yesterday, with travel groups the latest to be knocked back.

As protesters in the country took to the streets for a seventh consecutive day, Tui Travel and Thomas Cook declined 6.8p to 253p and 6p to 190.6p respectively after analysts predicted that bookings to the country would take a major hit.

Downgrading its advice on Tui to "sell", Citigroup said that "bookings are likely to be severely curtailed leading to lower load factors and profitability" while warning of the cost of a potential major repatriation exercise.

"We estimate that Egypt accounts for 5 to 6 per cent of annual passengers for the major tour operators," said the broker's analysts, who – also citing the recent problems in Tunisia – reduced their forecasts for the two companies by around £10m.

Airlines across Europe fell back as well, including IAG, which slid 4.6p to 256.4p. Meanwhile, Hikma Pharmaceuticals – which gets more than half of its sales from the Middle East and North Africa region – was 24p weaker at 804p.

Centamin Egypt, however, managed to bounce back from a large fall on Friday, despite its exposure to the country, closing 5.4p ahead at 136.4p.

A similar recovery was experienced by BG Group, which also dropped at the end of last week, even though it announced it had halted drilling in Egypt. The oil and gas explorer enjoyed a surge of 67p to 1,401p, assisted by support from the broker Chevreux and forecast-beating numbers being released by Exxon Mobil in the US. Meanwhile, the benchmark Brent oil price broke through $100 a barrel for the first time since 2008 as oil prices were pushed up by fears that the unrest could lead to the closure of the Suez Canal, despite assurances from officials over the supply route.

BP, which revealed it was evacuating some staff from Egypt despite its operations remaining unaffected, edged down 1.95p to 484.85p. The Alfa-Access-Renova consortium, the group's Russian partners in its TNK-BP business, said yesterday that it would oppose the payment of dividends by the joint-venture because of BP's deal with Rosneft. The oil giant is expected to reintroduce its own dividend in today's full-year results.

Despite the concerns over Egypt, the FTSE 100 managed to partially recover from touching an early low of 5,816.88 points, and it closed at 5,862.94, a loss of 18.43.

Speculation over RSA receiving an approach from rival insurer Aviva had excited market gossips last week, but Panmure Gordon's Barrie Cornes poured cold water over the idea yesterday. Although Mr Cornes said he could "see the logic for a combination of the two businesses", he pointed out a takeover attempt would be "unlikely" given RSA's valuation, yet the group was still lifted 0.6p to 135.9p.

Investors welcomed National Grid's interim management statement, in which it announced a new plan for its troublesome US unit that included cutting 1,200 jobs. The utility group was boosted 6.5p to 552.5p, as it also forecasted a large rise in its full-year operating profit.

Another strong interim management came from Greene King, the FTSE 250's top performer at the bell after advancing 23.7p to 472.2p. The pub group announced a rise in like-for-like food sales plus the £55.8m acquisition of Cloverleaf Restaurants. Prime Markets' Richard Curr said the update would lay to rest "any concerns over the impact of Christmas trading on the full-year outcome".

Taking a look at the real estate sector, Nomura's Mike Prew said that although "prime London property prices have been driven by the weight of euro money and there are pockets of tenant demand ... real estate investment trusts are now so under-owned they are battling to stay relevant – and seem to be losing." Nonetheless, he was keen on Derwent London, lifting its advice to "buy", and the group climbed 20p to 1,570p. Yet despite getting the same upgrade, Hammerson dropped 2.5p to 429.2p.

On the Fledgling index, the biotechnology group Antisoma was left on its sick bed last night as it dropped nearly two-thirds of its price. The company revealed that it had brought an end to the development of its leukaemia drug AS1413 following its failure in a final-stage trial. It has also halted work on AS1411, a separate leukaemia drug at an earlier stage, and the group declined 4.03p to 2.22p.

Another company suffering from disappointment was MBL, the entertainment products distributor, after it said it was no longer in bid discussions, and as a result investors left the Alternative Investment Market-listed group 21.5p weaker at 56.5p.

Those eagerly searching for a takeover deal were instead looking at Dawson Holdings, the magazine and newspaper distributor, which revealed it was in preliminary talks over a potential approach, prompting it to rise 2.13p to 7.38p.