Market Report: Analysts wail about the propects for Mothercare

Investors in Mothercare will have been forgiven for sobbing like babies yesterday. Having been hit recently by its falling popularity with Britain's mothers, shares in the high street retailer, which has issued three profits warnings this year already, managed to reach an eight-year low last night after analysts said there was still plenty more pain to come.

The stock plummeted by 10.7p to 168.3p after Goldman Sachs downgraded its rating to "sell". Mothercare has lost nearly 75 per cent of its value since December.

Criticising the company for its "mid-market position" compared with the supermarkets' offerings, the broker's analysts refused to paint a pretty picture of the future, warning that Mothercare's losses in the UK would only get worse, with like-for-like sales falling until 2014.

Goldman was similarly bearish about other high-street chains, saying it was increasingly cautious about the outlook for household and discretionary spending next year. As a result, it told punters in Halfords (whose stock fell by 12.7p to 327.1p) and Home Retail (down 5.8p to 100.1p) to get rid of their shares. Goldman also cut its advice on SuperGroup, owner of the Superdry and Cult clothing brands, to "neutral" and its shares fell by 10p to 624p.

Instead, Goldman recommended retailers exposed to emerging economies rather than just Europe. It kept luxury goods retailer Burberry on its conviction buy list, although the shares were still knocked back 66p to 1,341p.

Growing unease about last week's eurozone agreement, not helped by China appearing to play down the level of support it will provide to the region, pushed the FTSE 100 back 158.02 points to 5,544.22. However, overall the blue-chip index jumped more than 8 per cent in October – its best month since July 2009.

The banks were mired deep in the red, as Royal Bank of Scotland and Lloyds dipped 2.06p to 24.23p and 2.66p to 32.5p, respectively. Barclays fared slightly better after its third-quarter results, although it was still pegged back 5.9p to 195.3p.

The miners were hit by a double blow from the Far East. As well as Japan's attempt to rein back the strength of the yen prompting the dollar to rise and, therefore, commodity prices to drop, the sector was also left behind by pessimistic comments by the China Iron and Steel Association about demand in that country. Vedanta Resources ended up with the wooden spoon, falling 126p to 1,278p, and Kazakhmys moved 89.5p lower to 927.5p.

There was little bid chatter to get excited about. Dealers desperate for a gossip turned to the US, where vague speculation suggested that the retailer Bed Bath & Beyond might become a takeover target.

In fact, the main topic of conversation was MF Global (spun out of Man Group in 2007) as the futures broker filed for bankruptcy in New York. Despite Man clarifying that it now has no links with MF Global, the world's largest hedge fund still retreated by 3.5p to 149.9p as market voices noted increasing nervousness ahead of next Thursday's interim results.

Homeserve was in a severe state of disrepair on the FTSE 250, slumping 27.88 per cent to 350p. The insurer, which describes itself as the "fifth emergency service", had suspended sales at the weekend amid mis-selling concerns, following an internal review and one conducted by Deloitte.

An expansion to a project in Equatorial Guinea helped Ophir Energy, with the oil and gas explorer rising by 3p to 267.4p. At the other end, New World Resources continued its recent volatile run. After seeing its share price rise by a fifth last week, the miner fell back 77p, or 12.88 per cent, to 521p.

William Hill dropped 6.3p to 216p after the Numis Securities analyst Ivor Jones scorned the bookie's claims that problems at its online operations in Israel had been successfully resolved. Mr Jones warned: "The consequences will not be clear for some months."

The news that Visa Europe had taken a 8.8 per cent stake in Monitise pushed the mobile payments provider up 2.75p to 38p on the Alternative Investment Market. The gossips were claiming that a similar situation could happen with its peers Earthport (which rose 0.5p to 18.5p) and Western Union, with the two having announced last month that they were working together.

The small-cap insurance consultancy Charles Taylor slipped 12p to 132p after admitting it would just fail to meet its full-year expectations. On the fledgling index, the office supplies group office2office blamed government cuts for the fact that it was also on course to miss its targets. Its shares duly fell 10.5p to 148.5p.

There was better news from the drug-maker Skyepharma, which rose 12p, or 24.49 per cent, to 61p after getting approval for its anaesthetic product Exparel from the US Food and Drug Administration.

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