London shares are lower in early dealings as comments from hotel and travel firms suggest consumers are starting to feel the pinch.
Worries over the economy have certainly caught up with travel group TUI Travel, which warned profits this year will be at the low end of forecasts after UK bookings faltered. Bookings by Britons fell by 2% over the past 12 weeks with the Netherlands also down by 3%. The market has been hit hard by ash cloud disruption, good weather and the uncertainty around the emergency budget, resulting in a later booking pattern that has adversely affected profitability. Rival Thomas Cook is down in sympathy.
InterContinental Hotels is also lower even though it said the hotel trade is showing signs of recovering from the effects of the recession, and not just at the budget end of the market. The Holiday Inn owner reported a better than expected 22% rise in operating profit to $219m in the six months ended 30 June.
International Power shareholders will own 30% of the new company to be formed by the merger of the UK power company with French electricity giant GDF Suez Energy International. The proposed combination, which has the full backing of the International Power board, will be effected through a reverse takeover of GDF's businesses.
Cairn Energy is the stand-out riser on hopes the oil explorer will find something special from its activity in Greenland.
Bakery and sandwich chain Greggs delivered a 2.9% rise in half year sales and said despite the recent surge in wheat prices it remains confident for the full year. Pre-tax profit rose to Ł18.6m in the 26 weeks to 3 July from Ł16.5m the same time a year earlier. Sales for the period rose to Ł321m from Ł312m as it opened 26 new shops and closed eight. Like for like sales were up 0.7%, in line with company forecasts.
Services, maintenance and building group Interserve reported an expected drop in half-year profits but said it remains confident that the second half will show a significant uplift on the first half.
Housebuilders are under pressure after the latest survey from trade body RICS showed surveyors are seeing house prices fall for the first time since July 2009.
Few buyers and a rush of new properties onto the market are blamed. Persimmon, Tayor Wimpey, Bellway and Bovisare all lower.
source:digitallook
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