Investors have given struggling British tour operator MyTravel a vote of confidence after a newspaper report painted a better than expected picture of the firm's finances.

The Times reported on Monday that the firm has collected about �25m ($37.5m) in down-payments on holidays, in a sign that customers have stuck by the firm despite its well-publicised financial difficulties.

The same report said MyTravel was hopeful of renewing a vital �250m credit facility with its lending banks.

City investors welcomed the news, sending MyTravel shares up by more than a quarter to 33p in late afternoon trade.

Monday's share price recovery reflected rising hopes that the company may be poised to emerge from period of financial turmoil that wiped out nearly two thirds of its market value in a single day last month.

Up and down

The sell-off came on 17 October after the firm issued its second profit warning in two weeks, and announced that it had uncovered accounting problems which might cut its earnings by tens of millions of pounds.

The news alarmed financial markets still reeling from high-profile accounting scandals at collapsed US corporate giants Enron and Worldcom.

Investors were already wary of the firm, which had been hit by the downturn in the global air travel sector in the wake of the 11 September attacks.

Since October, MyTravel is thought to have been approached by rival tour operators - including online travel agents Lastminute.com and Ebookers - seeking to buy parts of its business.

Monday's share price rally came one day ahead of MyTravel's results for the full financial year.

The company is also expected to announce the results of a financial review by its new auditor Deloitte & Touche.

There has been speculation that this might recommend the sale of some of MyTravel's assets to raise cash.

Analysts expect the firm to announce that profits fell by 76% compared with the year before to �30m.