WPP took the wooden spoon at the end of a weak session for the benchmark index, declining by 7 per cent after Citigroup issued a "sell" note.
The broker disputed the view that the advertising agency was a "safe cyclical" play, arguing that the "earnings risk is significant in the near-term", adjusting for which left the shares above trough valuation.
"Bulls will argue that we are being overly dramatic and that much is already in the price," Citi said. "That is true, but here we believe WPP's late cyclicality could work against it.
"We have already seen a dramatic step down in organic growth trends in the second quarter, and while Sir Martin Sorrell has talked of a 'recovery of sorts' in the second half, the inflection in the third quarter, if there is one, is unlikely to be dramatic."
Consensus expectations of earnings stability in 2010 "may be too generous", the broker added, saying that the current year may not mark the trough for earnings.
Besides changing its recommendation to "sell" from "hold", Citi also revised its target price for the stock, to 340p from 440p. At the close, WPP lodged at the bottom of the FTSE 100, down 29p at 384.5p.
FTSE 250-listed Aegis, which is rated "buy" at Citi, was also weak, off 6.2 per cent or 5.75p to 86.5p after Cazenove downgraded the stock to "in-line" from "outperform", citing the share price strength relative to the sector.
"Given the deteriorating second-quarter trends being reported by competitors we expect cyclical headwinds to provide a difficult near-term backdrop for the shares," Cazenove said.
"In addition as we expect the interim results to be weak we see a relatively high risk of the recent outperformance reversing until visibility and trading conditions improve."
Overall, the market was knocked off keel by news that American employers had axed 467,000 jobs last month – well ahead of market estimates of around 363,000. Wall Street opened lower as a result, hastening London's decline in the final hours of trading.
The data scotched talk of economic "green shoots", depressing the FTSE 100 by 2.5 per cent or 106.44 points to 4234.27. The FTSE 250 was also unsettled, retreating to 7374.01, down 1.8 per cent or 132.7 points.
Fears that an economic recovery may still be some way off reversed the trend in the mining sector, which swiftly began to give back earlier gains. Anglo American, the target price for which was raised to 2117p from 1315p at Morgan Stanley, declined to 1726p, down almost 6 per cent or 106p. Xstrata, where Morgan Stanley raised its target to 1160p from 855p, slipped 4.2 per cent or 28.8p to 664.4p.
Morgan Stanley also made changes to its target price for Lonmin, down 5 per cent or 61p at 1157p, moving it to 1071p from 635p. For Vedanta Resources, down almost 2 per cent or 27p at 1388p, the broker moved its target to 2312p from 710p.
Waning recovery hopes also depressed the banking sector, with the Royal Bank of Scotland closing nearly 4 per cent or 1.5p behind at 37.9p. Barclays fared better, closing broadly unchanged at 289p, down 1.25p, while Lloyds lost 3.4 per cent or 2.35p to close at 65.9p.
Sector peer Standard Chartered was just over 2 per cent or 25p weaker at 1155p, as Credit Suisse issued a new circular, raising its earnings estimates on the back of the bank's recent trading update.
UBS also weighed in, raising its earnings estimates and lifting its recommendation for the stock to "neutral" from "sell", with a revised 1140p target price, compared to 1000p previously.
"We see the shares struggling to make progress from here, with group earnings likely at their near-term peak in the first half of 2009," UBS said. "However, with our new 2009 earnings forecasts well ahead of consensus, we also struggle to see the stock declining much further."
The leader board was sparsely populated. Diageo, up 8p at 905p, and Friends Provident, up 0.12p at 68.09p amid renewed talk that it may end up as a target for Resolution, were among a small handful of blue chips that managed to close in the black. Old Mutual, down 0.37p at 85.52p, was mooted as an alternative target for Resolution, although this was played down by traders.
Over on the FTSE 250, a Citigroup "buy" shielded the chip maker CSR, up 1.2 per cent or 4.5p at 374.25p, from the downdraft. "We expect CSR to benefit strongly from the growing penetration of embedded wireless connectivity chips across a spectrum of electronic device platforms," the broker said, initiating its coverage with a 450p target price.
On the downside, the directories group Yell was 5 per cent or 1.25p cheaper at 23.75p on the back of an overnight rating downgrade by Standard & Poor's. The agency moved its long-term corporate credit ratings for Yell to "B" from "B+" late on Wednesday, with a stark warning.
"The downgrade reflects our concerns about the faster-than-expected deterioration of Yell's operating performance and liquidity profile, which is no longer commensurate with a 'B+' rating," S&P said.Reuse content