UK firms hit as tensions in Egypt mount

Steve Dinneen
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THE FTSE 100 closed down 0.2 per cent yesterday at 5,862.94 after a day of jitters fuelled by the escalating tensions in Egypt.

The death toll reached over 100 as violent clashes in Egypt continued into their seventh day, with protesters calling for President Mubarak to stand down.

Travel firms were hit hardest, with their share prices dented across Europe. Thomas Cook sank almost three per cent to 190.6p, despite attempting to calm the market by saying it would continue to fly holidaymakers to the Red Sea, Egypt’s hottest tourist destination. It cancelled stays in Cairo for holidaymakers booked on round trips of Egypt.

The newly merged British Airways/Iberia airline holding company, International Consolidated Airlines Group suffered, with its shares sliding almost 1.8 per cent. TUI Travel was also hit hard, dropping 2.62 per cent and Intercontinental Hotels fell by one per cent. Both TUI and Thomas Cook cancelled UK flights to the Egyptian city of Luxor after government warnings against inessential travel to Cairo, Alexandria, Luxor and Suez.

Foreign secretary William Hague has not followed the lead of countries including the US, Turkey, Saudi Arabia and Canada in evacuating citizens and says travel to the Red Sea area remains safe. British Airways said it sent an extra plane to evacuate tourists yesterday and a BMI flight to Cairo carrying 64 passengers and six crew returned to London after turning back in mid-flight, a spokesman for the Lufthansa-owned carrier said. The firms will be counting on tourism bouncing back strongly after the troubles recede.

When gunmen killed 58 tourists and four Egyptians at an ancient temple in Luxor in 1997, tourism slumped but picked up fairly quickly and since then has weathered disruptions relatively well. The resumption of normal tourism is vital for Egypt, with the sector accounting for more than 11 per cent of GDP and employing one in eight people.

Egypt’s stock market will remain closed today – the third straight day without trading. It shut last week after recording a 16 per cent fall in just two days.