F&C Asset Management lost 21 per cent to 107.75p as Kaupthing began placing a 20 per cent stake, or 94 million shares, believed to be held by Dawnay Day. They are being placed at prices between 105p and 115p.

Friends Provident is attempting to sell its 52 per cent stake which could trigger a bid for the rest of the company but the sale dimmed hopes of a bid at a decent premium. There has been talk that Rabobank, the Dutch bank, and Aberdeen Asset Management are interested.

Much of Dawnay's total 26 per cent holding is held through contracts for difference, and there is some talk that the fund is selling to meet margin calls from funds who sold Dawnay the derivatives.

On Tuesday Altium issued a "sell" note on F&C saying the only reason it was trading at a premium was the expectation of a bid but said: "We cannot exclude a bid, potentially a little above the current share price. However, we remain of the view that now is not the best time for such a transaction."

Altium rushed out another note this morning in response to the placing saying: "Our initial thought is that our bid premium included in our target price of 120p was overoptimistic. We are reducing our target price to 110p, the mid-point of the range of the reported placing."

F&C reports interim results on August 7 and the following day Friends Provident will update on its strategic review, which will include whether it can sell its stake.

B&Q owner Kingfisher fell 6 per cent to 98.2p to after Goldman Sachs put it on its "conviction sell" list as part of a wide-ranging downgrade of retail stocks.

Goldman said it did not like the company's exposure to France and big ticket items, its leveraged balance sheet and its unattractive valuation. Next, downgraded to "neutral" from "buy" by the same broker, fell 3.8 per cent to 866.5p. Goldman cut midcaps Debenhams, Signet and Burberry, from "neutral" to "sell".

Debenhams and Burberry lost 9 per cent, Signet 0.5 per cent.

The FTSE 100 lost 79.1 to 5450 by 10.48am as bank and oil stocks continued to slide.

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