LONDON (Reuters) - Thomas Cook's TCG.L collapse boosted shares in TUI TUIGn.DE and budget airlines easyJet EZJ.L and Ryanair RYA.I on Monday as investors pinned hopes on the tour operator's closure cutting capacity in the saturated European holiday market.

The world’s oldest travel firm went out of business on Monday, stranding some 600,000 holidaymakers around the globe and sparking the largest peacetime repatriation effort in British history involving some 150,000 travelers.

At 0725 GMT, rival tour operator TUI was up as much as 8.4% at its highest since February, easyJet was up 6.1% and Ryanair was 2.6% higher, the three top gainers on the pan European STOXX 600 .STOXX index.

The FTSE 350 travel and leisure index .FTNMX5750 rose to its highest level in almost a year.

“Thomas Cook’s collapse likely brings bad news for holiday makers and UK/German governments, but takes capacity out and likely will boost shares most exposed to its markets,” said one dealer.

In London, Dart Group DTG.L which runs package holiday company Jet2holidays was up 8.7% after hitting its highest level since May 21.

FTSE small-cap listed On the Beach OTB.L was up 1.6% as hopes it will gain market share offset news the company will book a one-time charge due to the collapse.

“The removal of Thomas Cook’s capacity from the market should be positive for pricing in the short term, over the forthcoming winter season,” Liberum analysts said in a note.

Budget airlines easyJet and Ryanair benefited from the demise of Monarch Airlines and Thomas Cook is considerably bigger.