Depressed European spirit sales, renewed talk of management upheavals and sell advice from SBC Warburg did much of the damage.
Flat figures from Seagram, the Canadian spirit giant, underlined the difficulties that spirits groups are experiencing in Europe.
Allied, with such brands as Beefeater and Teacher, has the biggest European exposure of the big three spirit groups. It is estimated that 25 per cent of its sales go to the Continent, compared with Grand Metropolitan's 20 per cent, with Guinness, rolling out year's figures next week, down to 3 per cent.
Michael Jackaman, Allied's retiring chairman, has already warned that profits will be down 20 per cent, partly because of sluggish sales in Europe. The Seagram comments could indicate that trading is now even more difficult than when Mr Jackaman issued his warning last month.
Allied's shares have sharply underperformed the stock market in the l990s.
The group suffered a pounds 147m foreign exchange loss and its pounds 700m acquisition of Pedro Domecq, the Spanish brandy and sherry group with extensive interests in Mexico, has been a disappointment. The takeover occurred just before the Mexican economy came under pressure and the peso collapsed.
Even the group's sale of its food division has attracted criticism, with observers complaining that Allied should have been able to command higher prices. Sir Christopher Hogg, who is due to become Allied's chairman next month, will, it is argued, be forced to make extensive management changes. There is also the possibility that he will undertake a demerger, dividing the spirit and retailing businesses. Sir Christopher successfully split Courtaulds into chemical and textile companies.
If Allied does not get its act together it will almost certainly attract a takeover bid. It is valued at around pounds 5bn and, with its host of brands, must look a tempting target.
Guinness is expected to produce a modest profit advance - around pounds 942m against pounds 915m is likely.
The rest of the market had a sombre session, suggesting that Thursday's surge was, in fact, a dead cat bounce. The FT-SE 100 index fell 37 points to 3,644.8, with nervousness about New York creating much of the damage.
Many traders were worried that New York's triple-witching, the expiry of stock, futures and index options, could be difficult.
British Steel was the best-performing blue chip, climbing 5.75p to 191.25p on renewed talk of a share buy-back and US buying. Lasmo, on lingering bid hopes, rose 4.5p to 187p and Burton, said to be near to mounting a strike, gained 3p to 140.5p. Austin Reed, unchanged at 208p, is the rumoured target. Hambros, the merchant bank, firmed to 233p. It has performed powerfully in recent weeks as bid hopes have resurfaced.
United Biscuits gained 9.5p to 242p on hopes that a bidder will emerge to put it out of its misery. Cable and Wireless, 6.5p higher at 475.5p, was another reflecting bid hopes.
Alvis, the defence group, jumped 9p to a 172p peak on talk of bids from GKN or Vosper Thornycroft. The group is thought to be trading strongly; its shares were around 40p last year.
After the market closed Siebe, the engineer, disclosed that it had acquired 25 per cent of Unitech, a maker of electronic components, and wants to bid for the rest. It paid 590p a share against 515p (up 9.5p) in the market. The stake was sold by Electrowatt, the Swiss group, which was known to be seeking a buyer. It is also looking to sell a 42 per cent interest in Eurodis Electron, up 2p to 284p.
But takeover excitement evaporated at Zeneca, off 19p at 1,383p. Glaxo Wellcome was back in the doldrums, down 22.5p at 803.5p; Shield Diagnostics rose 17p to 163p on Nomura support. BAT Industries fell 14.5p to 500p. It is meeting analysts and fund managers on Monday to outline its US health litigation case.
Aberdeen Trust was firm at 141p, with some expecting a Jupiter Tyndall bid on Monday. The investment group, controlled by Commerzbank, has nearly 30 per cent.
Bluebird, the toy group, shaded to 298p as SBC Warburg carried out the signalled share buy-back at 304p. Darby, a safety glass maker, gained 6p to 67p. Lower profits were accompanied by an upbeat trading statement.
oJarvis, the construction and property group, admitted it was hoping to make a substantial acquisition. The shares gained 2.5p to 32.5p. One suggestion is that it could be buying a railway maintenance business, on similar lines to the deal by Amey, the road group.
oSkyePharma, the drugs group being developed by Ian Gowrie Smith shaded to 9p. It is on the verge of its second acquisition since the former Medeva man moved in last year. Because of the size of the deal SkyePharma shares are likely to be suspended.
oGlenchewton, the pots and pans distributor which has moved into pubs, gained 4p to 62p. Its next acquisition is likely to be a chain of theme pubs to add to the 16 catering pubs, acquired for pounds 6.1m.