Shares in BAT, which have fallen almost a fifth in the last two weeks tumbled a further 21p to 425p on the news. Heavy trading of almost twice the daily average number of shares underlined the increasingly nervous attitude of investors towards a sector which is seen as being under growing threat from anti-smoking litigation and political interference.
The detailed FDA recommendations had still to be formally cleared by the White House yesterday. But if Mr Clinton holds to the proposals, the clampdown will see a ban on all vending machine sales of cigarettes, curbs on tobacco advertising, and the launch of a $150m (pounds 100m) campaign against under-age smoking - paid for by the companies themselves.
The move - potentially the most far-reaching against the industry since the 1964 landmark US Government report linking smoking and lung cancer - is part of Mr Clinton's build-up to next week's Democratic convention in Chicago. For the first time it thrusts the smoking issue to the centre of the Presidential election campaign.
The new pressure from the White House comes as trouble mounts for the industry on two other fronts, all contributing to the recent slide of tobacco stocks on Wall Street and in London.
BAT shares have slumped 16 per cent, from 509p, since a Florida jury ordered its Brown & Williamson Tobacco subsidiary in the US to pay $750,000 to a long-time smoker of its Lucky Strike cigarettes who contracted cancer. The shares had traded as high as 585p in February.
This week Michigan became the 13th state to take the tobacco companies to court in an effort to recover healthcare expenditure arising from smoking- related diseases, seeking $14bn in compensation.
A verdict meanwhile is imminent in an Indiana case brought by the wife of a three-packs a day smoker who died of lung cancer at the age of 52. After the Florida verdict, analysts say a second adverse ruling may open the gates for a flood of lawsuits that would swamp even the massively rich tobacco companies.
The companies have already denounced the impending FDA regulations as "illegal and ineffective," and have served notice that they will go to the courts to have them struck down - meaning that implementation of the new curbs could be a year or more away. The companies claim that the proposed restrictions on advertising are a violation of their freedom of speech
The tobacco companies fear that if the FDA is given control of regulating cigarettes, it will gradually impose tighter and tighter restrictions on their sale.
"That's the worry,'' said Nyren Scott-Malden, an analyst at BZW. "But the industry thinks it has a very good case that the FDA shouldn't be the regulatory authority.''
He said that he was surprised by the extent of the drop in BAT's shares. "There seems to be no particular reason to get worried today,'' he said. "We've been waiting for this for a year, and it doesn't seem that [these regulations] are any different from what we've expected.''
But for Mr Clinton right now, politics are uppermost. By coming down harder than any previous President on tobacco and underage smoking, Mr Clinton is burnishing his "family values" image, and drawing a clear distinction with his Republican opponent Bob Dole, who caused huge controversy earlier this summer by declaring that he did not believe cigarette smoking was necessarily addictive.
In a new book Between Hope and History, published this week to coincide with the convention, Mr Clinton writes that "the tobacco industry has no right to peddle cigarettes to children or encourage them directly or indirectly to smoke."
While his assault on the industry may cost votes in tobacco producing states like Virginia, North Carolina and Kentucky - most of which are predominantly Republican anyway - the President is likely to more than recoup them elsewhere, especially in health conscious California and Florida.
Opinion polls suggest that measures against teenage smoking are overwhelmingly favoured by smokers and non- smokers alike.Reuse content