Europe open: Travel, leisure stocks in favour on UK Covid exit plan

European shares were broadly higher on Tuesday, led by travel and leisure stocks as the UK published its roadmap out of Covid-19 restrictions although German stocks weighed on the continent’s benchmark index.

The pan-European Stoxx 600 index was down 0.3%, with Germany’s DAX 0.44% lower. The UK’s FTSE climbed 0.26% on hopes of a post-Covid economic recovery but was tempered by a rise in unemployment.

Britain's unemployment rate hit 5.1% for the first time since 2016, although this was offset by a rise in the average earnings index for the three months to December to 4.7% from 3.7%.

“Most importantly, January’s claimant count change reading saw a 20,000 reduction in the number of people claiming unemployment-related benefits, instead of the near 14,000 addition forecast. Even better, the number from December was revised from +7,000 to -20,400,” said Spreadex analyst Connor Campbell.

“So while the unemployment rate might be stealing headlines, the rest of the report was good enough to, at the very least, keep the UK markets from posting any major losses.”

Travel and leisure stocks were the main gainers after Monday’s announcement from the UK government on a gradual easing of restrictions starting in March, with overseas holidays looking a prospect later in the year.

The news prompted a surge in holiday bookings, with easyJet reporting a jump in summer ticket sales, particularly in August, sending the company’s shares 11% higher at the opening before settling to a healthy 7.85% rise.

Airline group IAG, TUI Travel as well as Premier Inn owner Whitbread and travel outlet food operator SSP were also higher, while aircraft engine maker Rolls-Royce, which is paid by the number of hours its engines fly, also gained.

Intercontinental Hotels Group rose by more than 3%, despite posting a sharp decline in full year revenues. Aeroports de Paris and Frankfurt Airport operator Fraport were also higher.

BP and Royal Dutch Shell gained as crude oil prices hit 13 month highs.

On the downside, shares in German commercial cooking appliance maker Rational AG slumped 11.2% as it reported a cautious start to the year, saying the unpredictability of easing or tightening restrictions “is additionally unsettling many customers” with hotel and restaurant customer groups are especially hard hit.