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Thomas Cook says holiday demand rises despite security fears

By Sarah Young

LONDON (Reuters) - Britain's Thomas Cook said demand for its holidays was ahead of last year, defying market worries that security concerns would dent European appetite for foreign travel.

Shares in Thomas Cook, Europe's second largest holiday company behind TUI Group bounced 8.5 percent to 106.7 pence by 1002 GMT. The stock had lost 20 percent since Britain suspended flights to Egyptian resort Sharm al-Sheikh on fears that a bomb brought down a Russian plane late last month.

Security fears were intensified by the attacks on Paris which killed 130 people on Nov. 13. Holidays from Britain to Tunisia had already been halted after the death of 38 holidaymakers in a massacre on a beach in June.

Demand for holidays has strengthened, however, Thomas Cook said on Wednesday as it released annual results. Bookings from Britain were up 8 percent compared to the same time last year, and up 1 percent overall across its main markets in northern Europe.

With winter sun destinations Egypt and Tunisia out of the picture, holidaymakers were opting to go the Canary Islands, and on long-haul trips to North America, Mexico and Cape Verde, Thomas Cook Chief Executive Peter Fankhauser said.

"When customers want to travel they recognise the greater security that tour operators such as ourselves can offer," he told reporters.

For its last financial year to September 30, Thomas Cook reported a 4 percent drop in annual core earnings to 310 million pounds, slightly higher than a consensus analyst forecast. It had already warned that cancellations of holidays to Tunisia would impact profit.

It confirmed that it was on track to meet current analyst expectations for it to grow core earnings (EBIT) by 13 percent to around 350 million pounds for the current financial year, signalling it will be able to weather the cost of Egyptian holiday cancellations. It also reiterated its intention to pay a dividend the year after.

"The current trading picture is more robust than we expected and although it's early days post-Paris, they seem confident that the trading picture will continue," Shore Capital analyst Greg Johnson said.

(Reporting by Sarah Young; Editing by Keith Weir)