REUTERS GROUP suffered one of the worst falls amid the sharpest one-day sell-off in the FTSE 100 so far this year as analysts continued to downgrade the financial information provider after last week’s figures.

The £5 billion company was one of a clutch of blue chips unsettled by the quarterly review of the MSCI indices, the most widely followed institutional investment benchmark, which came into effect at last night’s close. Although no UK companies were among the 14 ejected from the MSCI Standard series, some dozen FTSE 100 constituents had their weighting within the MSCI modestly reduced. They included BP, off 14½p at 630p, AstraZeneca, 35p lighter at £26.35, Diageo, 1p behind at 876p, and Centrica, 2½p cheaper at 290½p.

But yesterday’s retreat at Reuters owed more to a downgrade from Credit Suisse from outperform to neutral. The Swiss broker is concerned by decreasing visibility on revenue growth recovery — that is, Reuters has a diminished view of the rate of increase in its sales — and a loosening of cost controls. Further, Credit Suisse points out that forecast revenue growth of 5 per cent in constant currency terms implies a modest 2 per cent rise on an underlying recurring basis. On that basis, the broker believes Reuters’ shares should trade broadly in line with its industry peers, meaning a 380p target — exactly the level at which they finished yesterday, down 18p.

The wider market took fright at a disappointing earnings outlook from Google, which, combined with a faltering oil price, pulled the FTSE 100 down 84.4 at 5,791.5. An exodus from Vodafone Group, off 4¾p at 109p, accounted for part of the index retreat. Citigroup cut its target from 135p to 120p alongside a 3.6 per cent reduction in 2007 earnings forecasts, for reasons unconnected with Monday’s revelation of an impairment charge of up to £28 billion.

Terence Sinclair, analyst, also thinks Vodafone will go on an acquisition strike, much as it did after withdrawing from the bidding for AT&T Wireless.

Alliance & Leicester continued to retreat, off 56p at £10.69, as Merrill Lynch repeated its sell recommendation with a lowered 851p fair value target following Monday’s disappointing results. James Invine, analyst, believes a special dividend would be a better way to return capital to shareholders than share buybacks, and cited concern at management guidance on margins on mortgage lending and weaker than expected growth in mortgage lending. Elsewhere, Fox Pitt-Kilton suggested that new guidance on bad debt, costs and revenues will spook investors hoping for a bid approach, so removing a “massive prop” to the share price.

Compass Group, off 1½p at 217¼p, proved a talking point as a block of 32.7 million shares, or a 1.5 per cent stake, changed hands at 215p through Merrill Lynch before the market had opened, prompting talk the trade could have been motivated by tax considerations.

Persimmon eased 20p a £13.96 as Hamish Melville, a non-executive director, disposed of 50,000 shares at an average £13.93 following Monday’s full-year results from the housebuilder.

• NEW YORK: Reports indicating a slowdown in growth in both Google and the US economy left the Dow Jones industrial average down 100 points at 10,997.50, by midday.

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