The parent company of Alton Towers is set to drop out of the prestigious FTSE 100 index, it has been announced.

Merlin Entertainments is set to leave the index of the London Stock Exchange's top 100 firms after stock prices slumped.

UK terror attacks and poor summer weather across Europe have affected trading for the group.

But a steady recovery in visitor numbers at Alton Towers, in Staffordshire, and huge investment in new attractions at the park have given reasons for optimism.

Aerial pictures taken of the new Alton Towers SW8 ride under construction in October 2017
Aerial pictures taken of the new Alton Towers SW8 ride, which is under construction, under construction in October 2017

Merlin will now be demoted to the FTSE 250 - the directory of the 101st to the 350th-ranked firms.

Speaking to The Independent, stockbroker AJ Bell investment director Russ Moult said: "Merlin has lost some of its magic this year and October's profit warning pretty much sealed its fate so far as FTSE 100 membership was concerned as the shares joined the 'down-10-per-cent-in-a-day' club.

"The company had done well to bounce back from the hit to customer visits to Alton Towers after a terrible accident there in summer 2015 but a spate of terror attacks across several major cities, including London, has taken its toll and profits are now expected to drop slightly in 2017."

Merlin operates global attractions including Towers, Legoland, Madame Tussauds, Thorpe Park and the London Eye.

The firm has seen its share price drop off since it peaked at 537p in May and, as of today, November 30, that figure stood at 357.75p.

It will drop out of the FTSE 100 - an abbreviation for the Financial Times Stock Exchange 100 Index - from December 18.

However, a massive investment in Alton Towers' CBeebies Land resort, where a dedicated hotel has been built, and the planned opening of a new rollercoaster next year are likely to see a steady visitor numbers recovery continue.

It is also planning to build another Legoland attraction in New York, in America.

Other companies to fall out of the list are defence firm Babcock International and medical technology firm ConvaTec Group.

High-profile promotions include former Derby County sponsor and takeaway delivery company Just Eat.

Its market value has soared more than a third this year to reach £5.4 billion.

Mr Mould said: "This shows how the internet places a focus not just on price but on service and Just Eat's success is testimony to its ability to harness the power of both technology and consumer satisfaction.

"The asset-light model relies on partners and word of mouth - customer reviews - as well as its scalable platform in a great example of how the internet can be used to create a powerful and profitable business model."

The FTSE ranks firms based on the market value of their outstanding shares.