Thomas Cook's profits hit by weaker trading

Image caption, Travel companies are having a tough year

Thomas Cook has warned its full-year profits will be at the lower end of market expectations, due to "softer" trading in its main UK business.

The travel company also said the weaker value of the euro was having an adverse affect on its earnings in countries that use the single currency.

Thomas Cook said the "uncertain economic environment" was putting off holidaymakers.

Its update comes a day after TUI Travel also reported weak trading.

Thomas Cook added that it now estimated the disruption caused by the volcanic ash cloud in April had cost it £81.9m.

Spending slowdown

Thomas Cook chief executive Manny Fontenla-Novoa said: "As we enter the final quarter, it is apparent that trading in the UK business is softer than expected, and, at current rates, the recent weakening of the euro will have an adverse impact on translation of our euro-based earnings."

The lower profits of travel companies such as Thomas Cook and TUI Travel comes as wider UK consumer spending appears to be slowing.

The British Retail Consortium (BRC) said on Tuesday that retail sales growth slowed sharply in July, due to fears over the impact of government spending cuts.

The BRC said like-for-like sales rose 0.5% compared with July 2009, down from a growth rate of 1.2% in June.

It added that shoppers were shunning high-value "big ticket" items in particular.

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