Market Report: Thomas Cook in demand after upgrade

Thomas Cook was in demand after Credit Suisse upgraded the travel operator to “outperform” from “neutral”, citing its stable and improving earnings outlook – as well as the presence of a known buyer of shares, the Chinese travel group Fosun.

The broker cited the stabilisation of earnings expectations, improving UK forecasts, and the best outlook for forex and jet fuel in 10 years. The UK now accounts for 35 per cent of Thomas Cook’s profitability and the strengthening of sterling against the euro should increase the appeal of European holidays, according to analyst Tim Ramskill.

Fosun, a private Chinese conglomerate that has already acquired France’s Club Med and a stake in Cirque du Soleil, has indicated that it plans to lift its stake in Thomas Cook to 10 per cent. It raised more than $1bn from a placement of shares in Hong Kong on Monday, which it intends to use towards acquisitions. Thomas Cook ended the day 3.1p higher at 156.1p as Credit Suisse lifted its price target to 180p.

The FTSE 100 was a sea of red, down 96.05 points to 6,933.8, as the bond market carnage continued in the absence of any fiscal promises from Greece.

EasyJet led the blue chips down, plunging 179p or 9.8 per cent to 1,654p despite posting its first profit in its weaker first half for 13 years, as it warned of hits from sterling and French air traffic control strikes.

Still, a handful of metals and mining stocks were on the rise thanks to strengthening copper and gold prices, headed by Fresnillo, up 12p at 713.5p, while Randgold gained 40p to 4,741p. But Anglo American, up 4p to 1,132p, lagged its peers after Investec analysts suggested the group should exit the iron ore business, which is acting as a drag on its precious metals and diamond businesses. The broker suggests the iron ore unit might be attractive to a Chinese buyer – a sale that would be welcomed by the South African government as it might encourage further Asian investment.

Anite, up 6.5p at 91.25p, was the biggest riser among small caps, bolstered by a positive full-year update in which the telecoms tech group said trading had been in line with expectations.