An economic downturn, even though it may help to fill these pages, is not good news for the companies behind newspapers. Already facing the unprecedented challenge of the internet, tighter wallets are making an online read ever more appealing — and advertisers are following, if they can still afford to market their products.

These are issues of which investors in Trinity Mirror, publisher of the Daily Mirror, are only too aware. After a recent rally, fuelled by traders covering short positions, the stock fell 9p to 116p yesterday as JPMorgan downgraded the stock to “underweight”. The broker said that weaker consumer spending was likely to hurt all advertising categories this year and that 2009 could be just as bad, if not worse.

It believes that UK historical ad spending rises cannot be sustained as advertisers pull away from decaying circulation, which has fallen by 33 per cent in the past 20 years, compared with a 19 per cent fall in the US.

It also noted the poor bargaining power that UK national newspapers have with advertisers because of intense competition. Moreover, on a local level, papers are losing classified advertising market share to non-newspaper websites. JPMorgan thus cautioned that UK newspaper stocks, which have fallen by 40 per cent since the start of the year, compared with US papers down by 48 per cent, could fall farther. This is bad news for Trinity, which the broker said was “caught in all the tough spots of the UK newspaper industry”. Sales of the Daily Mirror are falling, down by 6.5 per cent in June, and it faces intense competition from The Sun, which is cutting its cover price to offset its own decline. Meanwhile, Trinity’s regional titles are being challenged by numerous online classified competitors. The company’s ad revenue fell 15 per cent in July, after a 6 per cent decline in the first half, and the broker said that it could be a sign of worse things to come. However, it retained an “overweight” rating on Daily Mail and General Trust, down 1¼ to 413p, due to its strong business to business assets. Johnston Press, 1¼p lower at 72p, was kept at "underweight" for its exposure to local classified advertising.

Overall the FTSE100 fell 7.3 points to 5,534.5 as miners tracked weaker metal prices and retailers were under pressure from lower sales. Next fell 52p to £10.80 and Marks & Spencer lost 8p to 296p after July data from the British Retail Consortium showed that sales fell by 0.9 per cent year on year.

The advertising giant WPP fell 16p to 487p as it emerged that Citigroup had placed 28 million shares at 486p each. ITV, the broadcaster, up 3p to 50.6p, was the index’s biggest riser on continuing Endemol bid hopes.

Rank, the Mecca Bingo and Grosvenor Casino operator, advanced 1¾p after Hong Leong, the South East Asian conglomerate behind Thistle Hotels and the Clermont Club in London, raised its stake to 22.33 per cent. The group has long been tipped as a possible bidder for the company.

Hays fell 2p to 95p after Randstad, the Dutch staffing giant, said that it was not interested in buying the British recruiter.

— New York: Bank shares tumbled on Wall Street as fresh worries about the credit crunch and the economy outweighed the boost from the recent decline in oil prices. At the close the Dow Jones industrial average was down 139.90 points at 11,642.50.

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