It was no surprise, really, but the news sent yet more shudders through the creaking furniture retail market, as ScS Upholstery gave warning that credit insurance had been withdrawn from five of its fourteen suppliers.

ScS shares dived 15¼p to 14p and Land of Leather fell 6p to 13p. The insurer is understood to be Euler Hermes, the biggest in the market. ScS’s admission came after revelations in The Times last week that Euler had dropped cover for suppliers to several retailers, including Land of Leather and the privately owned MFI. Galiform, the joinery supplier that sold MFI to private equity last year, may still have exposure to MFI. It was down 2½p at 49¾p.

Both ScS and Land of Leather have issued cautions about diving sales and have cut television advertising, but they will need to order furniture for Christmas, nevertheless. Without insurance for their goods, suppliers will be demanding more cash up front from Land and ScS, but neither has much to spare. Land of Leather, which owed £53 million to suppliers in May, is negotiating with its banks over new loans by the end of July. ScS had £4.8 million cash left last month.

“We think ScS can survive, but the chances just got worse,” Dresdner Kleinwort said. John Stevenson, of Shore Capital, said that there was a risk that both companies could go under.

Mediterranean Oil & Gas rose 9p to 155½p after a director bought 30,000 shares and amid talk of an imminent reserve upgrade after strong test-flow results at its well off Italy.

Mirada, the interactive television company called Yoomedia before it was refinanced with Spanish money, was flat at 43½p despite talk that it was about to win a big contract with ITV for an interactive bingo channel.

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