LONDON MARKETS: TUI Travel Climbs On FTSE 100; Glencore Downgraded

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- TUI Travel PLC cruised higher Thursday, nearly topping the FTSE 100 benchmark, after its majority shareholder issued an upbeat profit outlook.

TUI Travel shares climbed 2.2% after German-listed TUI AG said growth in full-year earnings before interest, taxes and amortization should come in "at least at the upper end" of its forecast. Growth for underlying profit is being targeted at 6% to 12%.

TUI AG said growth at TUI Travel's hotels & resorts and cruises segments and strength in the key German and U.K. markets contributed to an 89% rise in group underlying profit to 163 million euros ($218.33 million) in the third quarter. TUI Travel in June agreed to merge with TUI AG, its biggest shareholder, in an all-stock deal that TUI AG said remains on track.

Shares of cruise operator Carnival PLC also rose, by 0.4%.

The FTSE 100 gained 0.4% to 6,685.26 after a flat start to the session. The benchmark added 0.4% on Wednesday, boosted by fading prospects of an early interest-rate increase by the Bank of England.

On Thursday, a ratings upgrade for British Land Co. to buy at Bank of America Merrill Lynch pushed shares of the property investment firm 2.5% higher.

Also advancing were shares of banking firm HSBC and Royal Mail PLC , by 2.1% and 1.7%, respectively.

But shares of Glencore PLC fell 1.3% following a downgrade to neutral from outperform at Credit Suisse, which cited fading momentum and valuation as reason for the move.

On the FTSE 250 index, shares in Carillion PLC jumped 8.4% after the construction and support services firm laid out its business plan for a merger with Balfour Beatty , signaling it is still pursuing the deal. Shares in Balfour Beatty rose 1.5%.

Carillion has now outlined "a credible road map on the merger and how it would achieve the GBP175 million reduction in the cost base and the associated costs. Balfour Beatty's board talks about a series of theoretical cost reduction opportunities," said Investec Securities analyst Andrew Gibb in a note to clients Thursday.

"A standalone Balfour Beatty does not look attractive, the Carillion deal does," he wrote.

In the currency market, the pound (GBPUSD) bought $1.6691, down from $1.6695 late Wednesday.

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