Trinity Mirror shares suffered a record one-day fall yesterday after the newspaper publisher admitted that advertising at the Daily Mirror and its sister titles had collapsed by between 12 per cent and 14 per cent in May and June.

The rapid deterioration - the worst rate of decline since the weeks after the terror attacks of September 11, 2001 - reflects the continuing softening of the British economy as a broad range of companies rein in marketing spending.

Sly Bailey, the chief executive of Trinity Mirror, said: “We can't defy the gravity of the advertising market, or the economy. All we can do is understand and react to what is going on, building our digital business and managing our cost base.”

Trinity Mirror gave warning that operating profit would be about 10 per cent below City forecasts - at about £150 million for the year, analysts suggest - and dropped a heavy hint that the dividend would be cut to conserve cash.

A £175 million share buyback programme is to be halted, with £67 million unspent, although the company said that it was well within the terms of its bank lending with £425 million of debt, representing two times underlying earnings.

The shares fell 42.5p, or 28 per cent, to 109p, as investors feared that there could be worse to come. Significantly, advertising from retailers, a significant source of revenue for the Mirror titles and other tabloids, declined at half the rate experienced by other categories, such as consumer goods, motoring and entertainment.

Dominic Williams, the press director of Carat, the media buyer, said: “It's going to be a very, very tough summer for everybody in newspapers, and I can't see it getting better this year. What is surprising, though, is how hard the Mirror has been hit, because the supermarket price war is ensuring that retailers are advertising heavily, and all tabloids do well out of retail.”

Advertising at the Daily Mirror, Sunday Mirror and People titles was down by 13.5 per cent in May and June, compared with a 2 per cent drop in the first four months of the year. Regional newspaper advertising fell by 12 per cent in May and June, compared with a 3.1 per cent downturn in the first four months of the year.

National newspaper executives have started speaking privately of a marked decline in advertising in recent weeks, despite investments in colour, as the national titles follow the poor start of the year experienced by the classified-heavy regional newspapers, suggesting that the economic downturn has entered a new phase in the weeks since Easter.

Ms Bailey said: “The only other publisher to report any figures from this period is Gannett [the owner of The Herald in Glasgow and other regional newspapers], and they said May was down 14.7 per cent. We don't think we will be the last to disclose these kinds of figures.”

That fear sent other newspaper and advertising-dependent media groups downwards. Johnston Press, the owner of The Scotsman, tumbled by 9 per cent to 52p, and Daily Mail and General Trust, which makes half its profit from the Mail newspapers, gave up 5 per cent to close at 313.75p.

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