Like travellers spying sunshine after long days of gloom, investors in Thomas Cook took heart yesterday that Arcandor, its cash-strapped parent, could be rescued by other German corporate giants. As a result, shares in Cook rebounded after recent heavy falls.

Since merging its travel business three years ago with MyTravel, the British tour company, Arcandor’s main business has been operating Karstadt – a chain of underperforming German department stores. It is struggling to persuade banks to roll over €650 million (£573 million) of debt due to be repaid next month and is applying for German state guarantees of these loans. It has said that it wants to hold on to its 52 per cent stake in Thomas Cook, but it has another €300 million of debt due in September and nobody knows what price the Government will demand.

Metro, Germany’s largest retailer, which owns the rival Kaufhof department store chain, has stepped in, suggesting to the Government in Berlin that it be allowed to take over Karstadt stores, removing the need for state aid and avoiding a fire sale of Arcandor’s Thomas Cook shares. Cook rose 14p to 237¾p.

The FTSE 100 gained steadily to close 98.34 points up at 4,446.45. Sentiment was helped by Lloyds Banking Group, up 8.8p at 98p, converting some of its Government B shares – which demand high interest payments – into equity.

Only five blue-chip stocks ended in the red, four of them miners. The aluminium price was hit by the London Metal Exchange revealing that its stores of unsold aluminium had reached within a whisker of a record four million tonnes. That triggered profit-taking in Rio Tinto, owner of Alcan, down 13p at £26.51.

The strengthening dollar and rising confidence in equities also weakened gold and silver prices, sending Randgold Resources down 83p to £39.28 and Fresnillo, the Mexican silver miner, down 23p to 595½p. Citigroup cut Fresnillo from “buy” to “hold”, saying that its sixfold increase since November had gone far enough.

Lonmin fell 23p to £11.48 as its dilutive rights issue weighed, but Vedanta Resources, the Indian miner, bucked the trend, rising 89p to £14.05, helped by the business-friendly Congress party retaining power in India. The election result also helped Standard Chartered, with 82 bank branches there, to rise 100p to £12.75 and Cairn Energy, close to oil production in India, to close 119p up at £24.54. JP-Morgan Indian Investment Trust was the biggest riser in the FTSE 250, ending the day 43¼p up at 329¼p.

Carnival, the cruise operator, rose 76p to £17.78 after it resumed cruises to Mexico and said that the swine flu outbreak would take five cents off earnings per share, lower than feared.

Autonomy, the provider of search engine software, rose 110p to £14.68 as it said that there had been a surge in sales to law firms after its acquisition of Interwoven, the American business. Goldman Sachs raised its target price from £17 to £22, saying that there were signs that businesses were looking to revive IT budgets.

— New York: Stocks rebounded after results from Lowe’s, a home improvement retailer, gave hope that the downturn was hitting the bottom. The Dow Jones industrial average closed 235.44 points up at 8,504.08.

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