F&C Asset Management spread more misery over the fund management sector today by warning of a "deteriorating economic environment and volatile markets". It also said that the uncertainty over its ownership was causing fund managers to delay handing it mandates which in turn could delay its three-year growth targets.

Friends Provident, which is trying to sell its majority stake in F&C, was dragged down 2 per cent to 125.1p. But fellow fund manager Schroders, which warned about the grim retail demand this week, was hit harder losing 3 per cent to 979p. HSBC lowered its target price to £13.50.

New Star Asset Management sank to new lows, down 3.4 per cent to 92.5p and Henderson lost 2p to 96.75p. F&C was little changed at 175.25p since it has already been strongly sold off.

Johnston Press lost 9 per cent in afternoon trading to a new low of 167.5p on fears it would breach its covenants. Analysts at Kaupthing said if ad revenues dipped 6 per cent this year against its 4.6 per cent forecast, its debt would hit its four times earning covenant level.

Marks & Spencer continued to fall following downgrade from JP Morgan yesterday and fears it was losing market share to Waitrose, owned by John Lewis Partnership. The partnership unveiled strong profit and sales growth from Waitrose today. M&S was off 2.6 per cent to 391p.

British Energy, the nuclear generator, jumped 5 per cent to 576p, helped by reports that the Government would sell down its 23 per cent stake over the next few years and wanted to accelerate the build of new nuclear stations, and as Goldman Sachs upgraded on the higher oil price with a 795p target, while Cazenove said this was all good news for British Energy.

International Power, which had strong results, was another big gainer, up 6 per cent at 382.5p.

But British Airways lost 4.25 per cent to 253.75p afer warning that its fuel costs for the financial year would rise by 20 per cent to £2.5 billion.

The FTSE 100 was down 32.2 at 5820.8 at 10.30am ahead of a widely expected hold in UK interest rates at 5.25 per cent.

Kazakhmys rose 3.5 per cent to £17.69 after receiving a raft of upgrades after in-line results but benefiting from rising metal prices and its 15 per cent stake in fast growing ENRC.

Vedanta Resources gained 3 per cent to £23.80, reaching a new record high.

Cable & Wireless lost 2.3 per cent to 154.9p as more analysts downgraded following its disappointing strategy day on Tuesday. Exane BNP Paribas cut its target to 213p and warned that weakening UK cashflow could delay the break-up of the company.

Inmarsat was one of the worst performers in the FTSE 250, losing 8 per cent to 451p after lacklustre results, with rising employee costs and the falling dollar.

International Ferro Metals, the South African ferrochrome producer, continued its surge, up another 3 per cent to 144p on expectations of rising ferrochrome prices.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive