LONDON (ShareCast) - London’s leading index has drifted further into the red, with Punch Taverns’ downbeat trading statement leaving pub operators looking dazed.

Punch has axed its final dividend to conserve cash. Plans to convert to a REIT have also been shelved on cost grounds. "The main priority for the use of cash is to support the repayment of the group's convertible bonds," Punch said. Like-for like sales from its tenanted arm fell 3.4% over the year to 23 August with a fall of 3.3% at the managed estate. Enterprise Inns leads the FTSE 100 lower, with Mitchells & Butlers also suffering.

Oil groups are now in the blue now, despite renewed weakness in the crude price and talk that it could go below $100 per barrel. BP and Shell post modest gains.

Cable & Wireless is in the red now despite being the best performer earlier after insurer Prudential agreed to take responsibility for just over £1bn of pension assets and 5,000 scheme members from the telecoms giant.

Shares in Vodafone fell after Credit Suisse lowered its rating on the mobile phone company to ‘neutral’ from ‘outperform’, citing concerns about the company’s performance in Spain and competition from Apple’s iPhone.

BG Group remains one of JP Morgan’s top picks in the integrated oils sector despite the broker trimming its price target on the stock by 20p to 1,480p.

JP Morgan has raised its rating on the shopping centre owner Liberty International to ‘neutral’ from ‘underweight’ in a review of the European property sector.

Electricals retailer DSG's like-for-like sales tumbled 7% in the 16 weeks ended 23 August 2008. Total group sales rose 4% in sterling terms and fell 2% in local currency. The trading environment remains challenging across Europe with gross margins across the group down 0.75% year on year. "We remain very cautious about the consumer outlook," DSG said.

Engineer Hamworthy has discovered accounting errors related to inventory valuation at its inert gas systems business, with an overstatement in inventories of £4.6m over a number of years. An adjustment relating to the year ended 31 March 2008 is anticipated at £1m with the majority of the remainder relating to financial years 2005 to 2007. "The board believes that this is an isolated error," the statement said.

Packaging group DS Smith says overall trading in the first quarter of financial year 2008/09 has been in line with management's expectations with the total operating result in line with this time last year.

James Bond gadgets group QinetiQ has been awarded a maritime facilities contract by the Ministry of Defence worth more than £150m over the next 15 years.

Speciality metal producer and recycler Metal-Tech crumpled today on news that the weaker dollar versus the Israeli Shekel will mean interim pre-tax profits falling "significantly" below expectations.

Falling property prices have plunged A&J Mucklow into a full year loss and it said the challenging market conditions mean a further drop in values is possible.

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