WRAPUP 1-Thomas Cook up on Arcandor relief; keeps Condor

* Arcandor says to retain Thomas Cook shareholding

* Thomas Cook pulls out of three-way airline merger talks

* Thomas Cook says on track to meet FY expectations

* TUI Travel says on track to meet 2008, 2009 expectations

By Matthew Scuffham

LONDON, Sept 29 (Reuters) - Shares in Europe's second-biggest travel firm, Thomas Cook (TCG.L), were the biggest FTSE-100 .FTSE riser on Monday after its 53 percent shareholder Arcandor (AROG.DE) said it would not need to sell any of its stake in the group.

Thomas Cook also said it had pulled out of talks to merge its charter airline Condor with TUI Travel's (TT.L) TUIfly and Lufthansa's (LHAG.DE) Germanwings and is on track to meet market expectations for the current year [nLT428038].

Europe's number one travel firm, TUI Travel, said it is confident of meeting its expectations for the current year and 2009 and said trading in the last seven weeks had progressed as it anticipated [nLT421632].

Shares in Thomas Cook were up 4 percent at 211-1/4 pence, as fears over a possible stock overhang, which had weighed on the shares in recent days, were removed.

Germany's Frankfurter Allgemeine Zeitung reported last week that Arcandor's lenders had been pressurising the troubled German tourism and retail group to divest its 52 percent stake in the tour operator.

JP Morgan analyst James Ainley said Thomas Cook shares had been extremely weak over the past few days based on the potential for a forced sale of Thomas Cook stock from Arcandor.

"We think that there should be some relief in the share price as investors refocus on the positive fundamentals," he said.

NOT ENOUGH UPSIDE FOR DEAL

Thomas Cook's chief executive, Manny Fontenla-Novoa, told reporters the financial prospects for a proposed three-way airline merger were not good enough and he was confident that Condor could flourish as a standalone airline [WLA0379].