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Shares of the UK's two biggest package holiday operators were enjoying a blue-skies scenario today as they led the market higher. TUI Travel sported a rise of 8.7p to 265.3p while Thomas Cook added 6.7p at 251.7p as steps were being taken to clear a large overhang of stock.
A consortium of banks, including BayernLB, Royal Bank of Scotland and Commerzbank, were looking to place a 43.9% stake worth an estimated £850 million in Thomas Cook, belonging to the German retail giant Arcandor, which went bust in spectacular fashion in June, wiping out the £3.4 billion fortune of its biggest shareholder Madeleine Schickedanz and putting 40,000 jobs at risk.
The consortium of banks arranged an accelerated bookbuilding exercise of 377 million shares within a range of 240p to 245p. The placing was well covered with the book closed before the start of official trading.
Elsewhere, it was onwards and upwards for leading shares as City investors continued to celebrate the return of confidence about the global economy and an expected pick-up in bids and deals. The FTSE 100 index continued to consolidate its position above the 5000 level with a rise of 8.51 to 5012.81 as it drew encouragement from another strong showing on Wall Street overnight. That stretches its rally since the low point in March to 44%, still well short of its record higher of 6950.6 achieved on 30 December 1999.
Big finds around the world are doing little to improve the outlook for the oil sector. That is the conclusion of HSBC, which warns that the industry faces headwinds in the short term despite looking undervalued longer term. The broker blames weak oil prices, cheap US gas prices and a continued softening of refining margins.
It is has repeated its 2010 forecast for Brent crude of $75 a barrel but warns of short-term weakness in the price. BP, 2.4p cheaper at 551.4p, is downgraded from overweight to neutral with Royal Dutch Shell, down 8p at 1702p, cut from neutral to underweight.
Anglo-Swiss mining giant Xstrata, up 15½p at 919½p, still has to decide whether to make a hostile bid for rival Anglo American, or walk away after its initial nil-premium merger plan was rejected. Anglo, up 22½p at 2068p, is continuing to consult shareholders. In the meantime, Citigroup appears to have reached the conclusion there is scope for improvement in Anglo American shares and has jacked up its target from 1700p to 2200p.
Desire Petroleum, up 19½p at 81½p, has signed a deal with Diamond Drilling to take a rig to the North Falkland basin. The rig will be mobilised in Nove mber and reach the Falklands in early 2010. Desire is also looking to raise between £20 million and £30 million to fund more wells while the rig is in the Falklands.
New York shares recovered from a hesitant start to post some useful gains and close at the best levels since October. Industrials and miners led the way on the back of firmer commodity prices. The Dow closed up 49.88 points at 9547.22.
General Electric built upon this week's gains with a rise of 2.3% to $14.83 after an upgrade from JPMorgan. Boeing put on 2.2% to $50.60 after it forecast that global air-cargo traffic would return to growth next year.
Asian shares posted strong gains amid signs investors are slowly getting their confidence back. In Tokyo, they were moving into stocks with a riskier profile, such as banking shares, trimming some of the losses made since the start of the month. Mitsubishi UFJ Financial rose 3.2% to 544 yen and Mizuho Financial 3% to 206 yen.
Traders said stocks were taking their cue from advances in global equities. They added that such broad gains point to an improvement in investor risk appetite that bodes well for Japanese shares.
Fujifilm Holdings rose 2.9% to 2805 yen after reports a Fujifilm unit has developed technology that will increase by 100 times the sensitivity of rapid testing devices for influenza viruses.
The Nikkei Average closed up 201.53 points at 10,10,513.67.
Strong gains were seen in Hong Kong, where investors were cheered by hopes of better corporate earnings prospects amid signs of economic recovery. Bank of China rose 3.1% to HK$4.28, a 26-month high. The country's biggest foreign exchange lender says it will need more capital to maintain its capital adequacy ratios.
The Hang Seng index was up 404.51 points at 21,255.55.
