FTSE bounces but travel firms suffer

Stability in Eurozone bond yields and short-term bargain-hunting gave London stocks some momentum today but investors remained wary after six previous sessions of losses.

US markets closed down last night after the bipartisan committee nominated to find $1.2 trillion (£764m) of government spending cuts admitted it could not agree on a plan.

Asian markets also closed lower after falling to an eight-month low mid-session, as fears over huge sovereign debt burdens across the developed world weighed on investor confidence.

But bond yields in peripheral Eurozone countries declined from recent highs today, easing pressure on governments’ borrowing costs. Spain’s 10-year yields were steady at 6.561 per cent and Italy’s at 6.653 per cent.

In London, financial and mining stocks benefited from the slight bounce in sentiment.

On the FTSE 100, life insurance buyout vehicle Resolution and commodities trader Glencore topped the risers, up 3.2 per cent and 2.5 per cent respectively.

Kazakh mining group ENRC gained 2.2 per cent and Anglo American rose 2.1 per cent.

The banks also climbed, with both Asia-focused Standard Chartered and Lloyds, which yesterday unveiled a new chief finance officer, George Culmer of insurance group RSA, rising 1.9 per cent.

RBS gained 1.3 per cent while Barclays rose 0.6 per cent.

Defensive stocks suffered in tandem, with healthcare group Smith & Nephew losing 2.4 per cent to be the worst performer on the FTSE 100.

Defence companies BAE Systems and Meggitt lost 1.2 per cent and 0.8 per cent respectively.

But among smaller companies, travel operator Thomas Cook saw its share price plunge 74 per cent after issuing a shocking statement warning that it would not report its annual results as it was struggling to meet its loan covenants and was in talks with its lenders.

The news that its trading was suffering badly hit peers in the travel sector, sending British Airways owner IAG down 0.7 per cent and cruise operator Carnival 0.1 per cent lower.

TUI Travel fell 11.4 per cent on the news.

Homeserve, the home insurer, also dropped 15.7 per cent after saying it would take a £10m charge and lose five per cent of its customer base over its mis-selling investigation.

Later today, the US reports its third-quarter GDP figure and the minutes of the latest Federal Open Markets Committee are published.