As the blue-chip index crept back from a seven-week high, WPP was among those left in the red after fears were raised over the advertising slowdown seen by the broadcasters spreading to the agencies.
The world's largest advertising group – which last year enjoyed a record growth in profits – touched a low of 735p in early trading yesterday before closing 14.5p behind at 746.5p following UBS's decision to name it as one of its "least preferred" stocks in the media sector.
"The early-cycle broadcasters have started to report a softening in advertising spend in Europe," its analysts said, "which we believe is likely to start to impact the later-cycle agency groups through the second quarter."
Citing the large exposure of WPP and its French rival Publicis to the automotive and fast-moving consumer goods sectors, they instead recommended the publishers, picking out Pearson – which stayed steady at 1,104p – as their "key call". Although negative on its peers, they did praise ITV, up 0.6p to 76.5p, describing it as "the only broadcaster we would own".
Further bad news for WPP came from the media buying group ZenithOptimedia, owned by Publicis, which estimated that last month's tragedy in Japan plus the ongoing unrest in North Africa and the Middle East have reduced the year's advertising spend across the world by about $2.4bn.
A late sell-off saw the FTSE 100 edge down 2.31 points to 6,053.44 as traders looked across the Atlantic to the beginning of earnings season in the US. Back on these shores, Burberry was among those holding the top-tier index back, declining 24p to 1,159p following reports from Japan of another earthquake hitting the country.
The release of the eagerly awaited interim report from the Independent Commission on Banking (ICB) meant the banks were the main focus of the day, and the sector reacted largely positively to its findings, dominating the leaderboard. Although the ICB said banks' retail arms should be "ring-fenced" from their investment operations, it did not, as feared, advise that they should be separated completely.
Barclays claimed top spot, advancing 8.2p to 305.35p, while Royal Bank of Scotland was lifted 1p to 44.43p. Meanwhile, Lloyds Banking Group – which was told it may have to sell more of its branches, though a demerger of its tie-up with HBOS was not recommended – increased by only 0.2p to 62.36p.
BHP Billiton was the top-performing miner, gaining 46p to 2,631.5p after Credit Suisse raised its rating to "outperform", citing its "cheap valuation and strong earnings momentum from oil and bulks". The group, which said it was "not aware of any basis" for the re-emergence of speculation that it could buy Royal Dutch Shell's shares in Woodside Petroleum, was also assisted by encouraging metal-imports data from China.
GKN surged forwards 2.2p to 204.6p despite revealing its operating profits for the first quarter lost £3m because of the natural disaster in Japan. Yet there was cheer to be had from the performance of its other units, and overall the engineering group's pre-tax profit rose more than 50 per cent.
Also updating the market was Michael Page, and the mid-tier recruiter climbed 8.5p to 525.5p, assisted by the news that its gross profit for the first three months increased by 30 per cent. Its figures led Investec's Robert Morton to reiterate his "buy" recommendation, with the analyst describing the group as "a very well-managed business with strong recovery prospects".
on the FTSE 250, Cobham's takeover chances were being talked up by Goldman Sachs, but it failed to prompt a large reaction from the defence company, which put on just 0.1p to 235.5p. The broker, which believes "merger-and-acquisition activity in the sector is picking up", described the group as "a potential acquisition candidate given its strong market positions, healthy free cash flow, and relatively small market capitalisation", though its analysts still kept their "neutral" rating.
CPP endured its second major fall in a fortnight, plummeting 21p to 129p after its share price shed more than 46 per cent at the end of the last month. That dramatic fall was prompted by the news that the credit card and identity theft insurer is currently being investigated by the Financial Services Authority, and yesterday its woes were compounded as Barclaycard said it was no longer selling CPP's products through one of its channels.
down among the small-cap groups, 888 dipped 2.5p to 43.5p in the wake of its announcement that its chief executive, Gigi Levy, is leaving the company, prompting analysts to urge caution on the outcome of the ongoing merger talks with Ladbrokes, which dropped 1.3p to 128p.
On the Alternative Investment Market, GW Pharmaceuticals was 12.5p higher at 108p after it agreed a deal with Novartis to license its cannabis-based multiple sclerosis product Sativex for sale in a number of countries around the world.Reuse content