Financial news

FTSE 100 recovery short-lived, Thomas Cook tanks

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Via Yahoo Finance

By Muvija M and Indranil Sarkar

(Reuters) – London’s FTSE 100 shed all of its early gains on Monday, as Asia-focused shares dropped over worries about Hong Kong protests, while tour company Thomas Cook plunged after updating on its recapitalisation plans.

The FTSE 100 index <.FTSE> was 0.1% lower by 0819 GMT, with the midcap index <.FTMC> rising 0.1%.

After jumping about 0.6% initially on the back gains in China, the FTSE 100’s Asia-exposed constituents weakened after Chinese officials said Hong Kong was at a critical juncture, as a political crisis deepens amid anti-government protests.

Yang Guang, a spokesman for the Hong Kong and Macau Affairs office in Beijing, issued the comments in a televised address, where he backed police handling of the protests.

The index, which had given into fears last week when U.S. President Donald Trump said he was not ready to make a trade deal with China, is on course for its second monthly fall this year, after recording its first in May when tensions between the world’s biggest economies had flared up.

“THE NEW NORMAL”

China had reacted to another $300 billion tariff threat by letting its currency fall below a key 7-per-dollar level for the first time in more than a decade earlier this month.

“It hasn’t been a major devaluation, and traders got used to the idea that a fixing above the 7 mark, could become the new normal,” CMC Markets analyst David Madden said.

Shares of Rolls-Royce <RR.L>, which supplies engines to planemaker Boeing <BA.N>, also weighed on the index with a 2% fall after media reports that fragments of an engine fell from a Norwegian Boeing 787 Dreamliner near Rome, Italy. (https://bit.ly/2YZBFwN)

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Among smaller companies, Thomas Cook <TCG.L>, the world’s oldest travel company, tanked nearly 20% after saying its existing shareholders were expected to be significantly diluted as part of its rescue plan.

Tullow Oil <TLW.L>, however, jumped 17% on the midcap index after it announced a major oil discovery in the Orinduik block in Guyana and raised expectations it will move to develop a field in the oil-rich South American country.

Fund Burford Capital <BURF.L>, whose shares have plummeted after coming under attack from short-seller Muddy Waters, lost another 6.7% after saying it had identified evidence consistent with illegal market manipulation of its shares.

(For a graphic on ‘London’s FTSE 100 vs Europe’s STOXX 600 as trade war goes on’, click https://tmsnrt.rs/2N6uCQP)

(Reporting by Muvija M, Indranil Sarkar and Shashwat Awasthi in Bengaluru; Editing by Shounak Dasgupta)

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