Market Report: Rexam canned as festive spirit deserts market

It may well be the season to be jolly, but the traditional recipients of goodwill from consumers, the high-street retailers, may be forgiven for saying "bah humbug" in 2007. On a painful day for the markets, the retailers were smashed as fears over weaker than expected trading, rising interest rates and the ongoing credit crunch intensified.

Rexam was the worst hit FTSE 100 stock, as it continued to suffer the impact of last week's profits warning. Citigroup compounded the misery, cutting the stock to "hold" and lowering its price target from 575p to 440p "in light of significant earnings downgrades and greater uncertainty about prospects". The can maker gave up 6.37 per cent to 397p.

Also on the end of a smacking was Home Retail Group, losing 5.76 per cent to 311p. It has suffered since Goldman Sachs put it on the conviction sell list last week, with one analyst saying there was "zero appetite" for buying.

The clothing retailers were particularly in focus after a bearish note from Seymour Pierce, with analyst Andrew Wade saying the sector was particularly at risk. He downgraded Next, which promptly fell 4.47 per cent to 1,602p, and Debenhams, 7.08 per cent off at 75.5p, "believing that they cannot defy gravity".

The markets shuddered into reverse, following the US and the Far East. The Dow shed 178.2 points on Friday evening after traders in London had gone home, and the Nikkei followed, 264.7 points lower in the morning to 15,249.8. The FTSE 100 wasn't helped by the CBI, which cut its estimated forecast for GDP growth in the UK to 2 per cent next year from 2.2 per cent. The news sent the market down 119.2 to 6,277.8.

Takeover talk was as dead as a turkey at this time of year. "No one is gossiping, and I'm not sure anyone would want to listen in these markets even if there was chat around," one sales trader said.

The insurance group Aviva fell 4.38 per cent to 644p after its subsidiary Norwich Union Life was fined by the FSA. The UK regulator said Norwich's systems did not adequately protect customers' confidential information and fined the group 1.6m.

Ten companies made it into positive territory, with classic defensive stocks such as Imperial Tobacco and Unilever featuring. Imperial was top of the leader board, up 1.63 per cent to 2,619p, while Unilever rose 0.34 per cent to 1,761p.

Credit Suisse resumed coverage of Reed Elsevier with an "outperform" rating and a target price of 710p. It said: "Following the education sale completion, Reed Elsevier will enjoy one of the lowest cyclical exposures in the sector and thus is one of the few relatively safe havens." The supportive note pushed Reed 1.17 per cent higher at 648p.

The FTSE 250 retreated 273.2 points along with the top tier, with the property company Minerva the worst of the day, down 9.78 per cent to 115.25p. Also down was easyJet on talk that Deutsche Bank had placed 3 million shares at 573p. It fell 15p to 580p.

John Wood Group topped the second-string risers, closing up 5.17 per cent at 427.25p. It strengthened after its JP Kenny Engineering subsidiary landed an agreement with BP International. The group is to provide project management for the oil major's offshore development projects.

Broker support pushed up Autonomy, as Citigroup slapped a "buy" rating on the stock. The broker said there was good demand for its systems as well as a strong earnings momentum and long-term fundamentals. The software group rose 2.42 per cent to 888p.

On the small caps, the financial adviser Accuma Group closed the day near the summit after it received a "very preliminary approach" from an unnamed suitor. The company's statement sent the shares up 25 per cent to 26. 25p. Traders speculated that the move would be driven by consolidation within the sector.

On the downside Alphameric's takeover talks derailed, sending its stock spiralling 17.53 per cent to 20p. The group had announced in October that it had received expressions of interest, but these had not progressed into a decent offer.

Playtime was over for the toy seller The Character Group, as a trading update cut its value by half. The group closed at 68.5p after it said that the difficult trading environment had resulted in slower-than-anticipated sales.

Crescent Hydropolis Group, which specialises in underwater hotels, hit its latest all-time low as sellers strapped on the flippers and headed for the exits. The stock was 44.83 lower at one stage, but staged a rally to close down 3.4 per cent at 7p. It peaked at 60p in 2005.

It was a good start to life on the main market for New Britain Palm Oil, which jumped 16.8 per cent to 292p. The float, which was run by Kaupthing in its first LSE main market listing, raised 90m and was three times oversubscribed.