Market Report: Sports World owner grabs stake in John David

The transaction, one of the boldest share purchases on a day of frights and cowardice in the markets, comes less than a week after Mr Ashley picked up a 9 per cent stake in JJB Sports.

The 9.1 million shares in John David changed hands at 250p, above the prevailing price, representing an honorable exit for Schroders, the fund manager selling the stake.

There have been flurries of takeover speculation surrounding John David since the founders sold their 56 per cent stake to Pentland, the Rubin family investment vehicle that owns UK sports brands including Speedo, Ellesse and Kickers in the spring. Although Pentland said then this was a long-term holding, it will be allowed to make or join a bid from December.

Friends of Mr Ashley have long said he believes there will be consolidation in the sports retail sector. John David owns 295 JD Sports stores, while JJB has 413. Sports World, Mr Ashley's company, has a little less than 200 outlets in the UK. Trading across the sector has been tough in recent months, and the Allsport chain went into administration two weeks ago. John David held out the prospect of a late-year rebound when it reported poor sales but improved margins this month.

John David shares were up 3.5p to 241.5p yesterday despite the vicious sell-off across the market. JJB Sports was a more typical 5p lower at 165p.

Another retailer was in demand: Marks & Spencer, which emerged as one of the four FTSE 100 stocks in positive territory. Investors are increasingly convinced we are witnessing the start of a recovery at the group, after last week's bullish trading update. The stock was 2.5p better at 397.5p, having earlier touched the totemic 400p at which Philip Green said he might bid last year. Other blue-chip gainers included Enterprise Inns, the pubs company, up 5.5p at 792p on hopes that it will not bid for all or part of Spirit, and AB Foods, the owner of the Primark retail chain which is storming ahead as consumers trade down to cheaper clothing basics.

AstraZeneca was 18p better at 2,631p on a good day for the drugs sector. The Swiss firms Roche and Novartis have posted strong results this week, and AstraZeneca should do so next Thursday. Glaxo-SmithKline, which reports on the same day, was down just 6p at 1,455p on talk that sales of Relenza, a flu treatment once thought almost negligible to the company's prospects, will be boosted by the bird flu scare.

The FTSE 100 looked bad. Down 96.1 to 5,167.8, it suffered a bigger one-day fall than on the day of the 7 July terror attacks. But it was the FTSE 250, the mid-cap index, where the worst losses were witnessed. It fell 185 to 7,421.5. Why? Partly because that is where investors have the biggest profits to bank. But mainly because many of the large stocks have been pumped higher by speculative buying through financial instruments such as contracts for difference (CFDs). The CFD brokers were asking clients to close their worst positions yesterday, exacerbating the declines in many stocks.

This was the spiral that MFI Furniture got itself into yesterday, and it ended down 6p at 79.75p. There are so many speculative investors still with shares in MFI that each new scare story on the company's future shakes out a few more. The furniture retailer is in effect at the mercy of its banks because, although it insists it has not breached any debt covenants at this stage, trading has been deteriorating. Richard Ratner, the veteran retail sector analyst at Seymour Pierce, told clients yesterday the core chain could be put into administration in the new year if orders do not improve significantly. He has long advocated selling the shares, and pushed his target price down from 75p to just 50p.

There were new bearish rumours, too. McBride, which makes supermarket own-brand detergents, was off 3.75p at 149.25p. Word is that one supermarket client in particular is putting pressure on McBride to cut its prices or face the loss of a big contract. Meanwhile, Signet, the owner of the Ernest Jones jewellery chains in the UK, was off 5.25p at 93.25p on suggestions of poor trading at its Kay Jewelers business in the US.

News from Bowleven put oil sector traders in mind of Regal Petroleum, whose share price collapsed shortly after a big fundraising this year (it was off 7.5p at 112p yesterday). Bowleven raised £53m at 650p a share through the broker Noble & Co just four weeks ago to fund drilling in Cameroon, but its first well turned out to be dry, sending the stock down 38 per cent to 395p.