Thomas Cook was the biggest faller in a plunging FTSE 100 yesterday as it flew into a cloud of negative sentiment over falling demand for travel and on mounting fears over the future of Condor, its loss-making scheduled airline.

The tour operator, off 18.6p at 183.6p, agreed to sell the German airline to one of its largest customers – the low-cost carrier Air Berlin – last September for cash and a 30 per cent stake in Air Berlin. But the rising cost of fuel and Air Berlin’s falling share price mean the deal is likely to be too expensive for the German company.

The German competition authorities have raised concerns over the deal and have given Air Berlin until Monday to state its case or see it blocked. Thomas Cook revealed last month that while UK first-half losses had narrowed, the German airline had sunk 38 per cent deeper into the red with a £30 million loss.

Blue Oar Securities cut both Thomas Cook and Tui Travel, down 9.2p to 177.3p, to “sell” saying that they may meet 2008 forecasts, but “visibility on 2009 is very low”.

The FTSE 100 closed down 122.8 at 5,406.8, its lowest level since November 2005, as the heavyweight oil sector and the banks slid on fears of a global recession. BP fell 11¾p to 540¼p and Shell lost 45p to £19.09.

Icap, the interdealer broker, fell 34½p to 428p on fears over the health of one of its key clients – Lehman Brothers in the US. F&C Asset Management was the worst performer in the all-share index, off 38¼p to 97½p, after Dawnay Day sold its 20 per cent stake, sparking fears that a long-expected takeover would not materialise. Friends Provident, F&C’s parent, has put its 52 per cent stake on the market, which could spark a bid for the whole group.

Dawnay held much of its stake through contracts for difference and did not deny that the sale was sparked by a margin call from its broker. The 94 million shares were sold by Kaupthing to a range of institutions at 100p, below its initial offer of 105p to 115p.

Cadbury fell 48½p to 598½p after Merrill Lynch cut it to “underperform” with a 575p price target, saying that Kraft looked like the only potential trade buyer. Mars is merging with Wrigley, creating a more powerful competitor in the UK, while Hershey has effectively ruled out a bid.

ITV fell 2.9p to 40.1p on industry talk that its latest advertising figures, due out today, will disappoint.

Goldman Sachs placed Kingfisher, owner of B&Q, on its “conviction sell” list saying its trading update due in two weeks would be grim on falling French DIY sales. The shares fell 5½p to 99p. It also cut Next, down 5p to 895½p, to “neutral” and slapped “sell” advice on Debenhams, down ¼p to 34½p, Signet, down 1¾p to 45½p, and Burberry, down 26½p to 403p.

Soco International lost 156p to £15.46 on revealing that after almost a year of drilling and testing it had not been able to get oil or gas out of its crucial Vietnam well at a meaningful rate, confirming fears that first surfaced in the market in April. Merrill Lynch cut its rating by 350p to £25.77.

— New York: Wall Street stocks rose as news of an $18.8 billion acquisition in the chemicals sector and optimism about Apple’s iPhone improved sentiment. The Dow Jones industrial average closed up 81.60 points at 11,229.00.

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