By Yadarisa Shabong and Indranil Sarkar
(Reuters) - London's FTSE 100 index slipped on Monday as weak German economic data weighed on banking shares, offsetting a surge in travel operators and airlines after the collapse of the world's oldest travel firm Thomas Cook.
The FTSE 100 (FTSE) fell 0.3% with financials and mining stocks dragging the most, while the FTSE 250 midcaps index (FTMC) shed 0.6%.
The banking index (FTNMX8350) lost nearly 1%, tracking a fall in British bond yields, after weaker-than-expected German data showed the private sector contracting for the first time in more than six years.
Further dampening sentiment in the sector was a note by JPMorgan (NYSE:JPM) saying it expects downward risks for UK domestic banks in most Brexit scenarios.
Global miners such as Glencore (L:GLEN) and Antofagasta (L:ANTO) also weakened as a lack of clarity in U.S.-China trade talks dented metals prices.
"Trade tensions between the two largest economies in the world are having an impact around the global, and the dreadful manufacturing figures from Germany this morning is a great example of how the problem spills out beyond the U.S. and China," CMC Markets analyst David Madden said.
The FTSE 100, whose constituents bring in more than two-thirds of their profits from abroad, saw its steepest monthly fall this year in August when trade tensions between the United States and China escalated.
While the index has benefited from the weakness in the pound for most of 2019 as a painful Brexit process plays out, recent steps by lawmakers in preventing a no-deal Brexit have brought gains for the currency and in turn weighed on exporters.
The FTSE 100 has gained just 8.9% so far in the year, well behind its European counterpart's (STOXX) 15.4% rise.
The collapse of Thomas Cook spurred buying in tour operator TUI (L:TUIT), airlines Ryanair (L:RYA) and easyJet (L:EZJ) and British Airways owner IAG (L:ICAG), as investors anticipated the tour operator's closure would cut capacity in the saturated European holiday market.
"Such a tragic collapse… leaves plenty of money on the table for its sector peers, a fact that hasn't gone unnoticed by investors," Spreadex analyst Connor Campbell said.
The FTSE 350 travel and leisure index (FTNMX5750) rose to its highest level in almost a year.
Marks & Spencer (L:MKS) lost 3.2%, on its first day as a mid-cap constituent and after the abrupt departure of its finance chief on Saturday.
It is the first time the 135-year old retailer has been relegated from the FTSE 100 since the index's inception in 1984.
Thomas Cook share performance vs other UK tour and related companies: https://fingfx.thomsonreuters.com/gfx/mkt/12/6420/6351/TCG.png
