Investors were checking out of Thomas Cook rapidly as the tour operator said it would meet forecasts only if sterling stopped its relentless fall against the euro. No one was prepared to take that bet and the group fell 13¾p to 255¾p. The weak pound is a double whammy for tour operators, such as Thomas Cook and TUI Travel, down 1p at 249p, since it squeezes profits taken in euros and hits demand from its biggest customer base – the sun-deprived British.

Thomas Cook is also battling soaring aviation fuel prices – 8 per cent of its total costs – and as broker Collins Stewart pointed out, reiterating its “sell” advice, these costs could be “more significant than expected next year” if it fails to sell its Condor budget airline to struggling Air Berlin. For the first time yesterday Thomas Cook said it is looking at other options for Condor if the sale falls through.

Collins Stewart’s Andrew Fitchie also cautioned that holiday demand traditionally lags a general consumer downturn, meaning that cancellations may start accelerating next year.

The FTSE 100 meanwhile closed up 35.8 at 6,251.8, buoyed yet again by commodity stocks and by better than expected results from BT, up 12p to 235¼p.

BHP Billiton firmed another 56p to £21.74 on Australian reports that Chinese investors were plotting to take a 9 per cent stake through an Australian fund to make their dealings more acceptable.

The bank sector was on the slide after Barclays, down 8½p to 418¾p, announced another £1.7 billion write-off and heightened fears of a rights issue. However, Bradford & Bingley was the biggest victim, down 9p to a new low of 135p, as a raft of analysts cut their price targets after it said on Wednesday that it was planning a dilutive rights issue. Sector confidence was dented further by a spike in Libor – the interest rate at which banks lend to each other.

Cairn Energy was another strong performer, up 144p to £35.49, after UBS raised the Indian oil producer’s target price from £32.50 to £45, based on the soaring price of the black stuff.

London Stock Exchange rose 7p to £10.88 after one of the key bears on the stock, Sanford Bernstein, raised its rating from “sell” to “hold”, saying the price had fallen far enough to make it an affordable target for the New York Stock Exchange or Nasdaq.

In the mid-caps, yet another company announced a dilutive equity placing. Balfour Beatty, the construction group, raised £186 million by issuing 10 per cent of its market cap at 430p. It lost 13¾p to 439¾p.

WH Smith lost 15¼p to 402¼p after Citigroup downgraded it from “buy” to “hold” as a reaction to its chief executive, Kate Swann, selling nearly half her shares on Wednesday. The sale came a few days after a similar sale by the finance director, Citigroup noted.

MHP, the Ukrainian poultry and grain business, rose $2 to $16 on its first day of trading as a secondary listing via global depositary receipts rather than ordinary shares, on London’s main list.

— New York: The stock market achieved a second successive daily advance, with investors encouraged by a fall in oil prices and some better than expected economic data. The Dow Jones industrial average closed up by 94.30 points at 12,992.70.

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