Sly Bailey, the chief executive of Trinity Mirror, accused the City of being too gloomy about the long-term prospects for newspapers, after the publisher of the Daily Mirror said it had returned to overall advertising growth.

Figures released yesterday showed that Trinity Mirror recorded 0.1 per cent advertising growth in the ten months to October, with a decline of 1.5 per cent in the first half more than offset by recovery of 2.7 per cent between July and October.

Ms Bailey said that “the market has put far too much weight on the structural aspects of the advertising decline” - a reference to the impact of the internet on classified advertising - and “appreciated far too little the cyclical nature of the advertising market”.

The shares responded to the recovery, improving 9½p to 350¾p. The stock has been rallying all week, after worries about the prospects for advertising in 2008 had pushed Trinity Mirror to its lowest level since 2003.

Ms Bailey said: “The market is undervaluing the resilience and cash-flows of these businesses.” She added that she would “like to see the share price over 400p” to better reflect the prospects of the business, which includes a string of regional newspapers as well as the redtop daily.

Trinity’s data included all the group’s internet revenues, which account for 5 per cent of continuing operations, but she said that in some parts of the business print advertising was back in growth after a two-year contraction. She said that the Mirror and the group’s other nationals, including the Daily Record and The People, were seeing strong growth.

At the national titles, where digital revenues are modest, advertising grew 0.9 per cent, and despite circulation declines across the industry, the newspapers improved circulation revenues by 0.9 per cent, with cover price rises offsetting sales loss. Criticising the discounting strategy used by The Sun, published by News International, owner of The Times, Ms Bailey said: “It’s easy to sell a newspaper at 10p or 20p; The Mirror is the only title that does not cut its price somewhere in the UK”.

The group’s regional titles performed less well, with advertisng flat after ten months, although that was an improvement on the 1 per cent decline in the first half. But Ms Bailey said that a collection of jobs websites amassed in a series of acquisitions gave the company “10 per cent of the online recruitment market”.

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