The FTSE 100 extended its losses during the day, ending down 81.5 points at 6527.9, as WPP and AstraZeneca weighed on the index, as did a poor performance on the other side of the Atlantic.
WPP, the advertising giant, posted its third-quarter results today, with a near 5% rise in like-for-like sales that disappointed some analysts as they came in at the lower end of expectations. It shares subsequently fell 29p to 665p.
An analyst at Panmure Gordon, said: "The market is slightly disappointed by the like-for-like numbers. We were expecting the currency impact to be slightly different from the number that's presented."
AstraZeneca, the UK's second largest drug company, was also one of the top losers today after a decision by the European Patent Office to revoke its combination patent for one of its best-selling drugs - Symbicort, the two-in-one asthma medicine. Shares fell 93p to £24.61.
The drug made sales of $1.02bn in Europe last year, and data exclusivity ends in 2010, which means that generic companies will be able to get AstraZeneca's data on the treatment and make it after 2010. The patent in Europe was originally due to expire in 2012, and could even have gone on until 2015 in some European countries.
The banking sector also dragged on the FTSE 100 due to general negative sentiment in the sector. HSBC, for example, fell 19.5p to 923.5p, not helped by UBS which decided to downgrade the company to neutral from buy. Alliance & Leicester fell 21p to 735p, and Barclays dropped 13p to 589.5p.
Troubled Northern Rock, meanwhile, fell 17.6p to 186.9p after it emerged its borrowing from the Bank of England had increased to £16bn over the last week. The bank also announced that its chairman Matt Ridley had quit and would be replaced by Bryan Sanderson, the former chairman of Standard Chartered Bank.
On the plus side, though, the housebuilders increased after a positive note by Merrill Lynch, which reiterated its buy rating on the sector. Barratt Developments was near the top of the FTSE 100, up 8.5p at 667p, and Persimmon followed close behind, rising 11p to 971p.
But it was Resolution that led the charge, up 15p at 722p as Pearl, the insurer, raised its offer for the company to 691p a share in cash, up from the previous rejected offer of 660p a share. Resolution, however, rejected the offer, saying it continued to recommend that its shareholders vote in favour of a merger with Friends Provident, pointing out that the Pearl offer "significantly undervalues Resolution and its prospects as part of a Friends Financial Group".
On the FTSE 250, the housebuilders emulated their counterparts on the index of 100 leading shares. Bellway was up 21p at £10.59, and Redrow rose 11.2p to 383, also helped by rumours that someone had tabled a 500p-a-share offer for the company, which would value it at £800m.
Still on M&A talk, Alfred McAlpine, the support services firm, rose 19p to 555p as it emerged that Carillion had the support of shareholders owning 14.9% of the former for its takeover offer. Alfred McAlpine has rejected a 570p-a-share offer from Carillion, saying it undervalues the company at nearly £600m. But Carillion said it had received non-binding letters of intent from Schroder Investment Management and New Star Asset Management to accept a potential offer - a move could force Alfred McAlpine to the negotiating table. Shares in Carillion fell 7p to 384.5p.
Lower down, Instore, the struggling budget retail chain, soared 1.68p, or 23%, to 9p after it met expectations for its first-half results. The retailer said total sales had risen 4.5% in the 26 weeks to August 25, and loss after exceptional items fell to £5.3m from £11.6m at the same time last year.
Peter Burdon, chief executive, said recent trading had been difficult due to a general tough trading environment, and an exceptionally poor summer. But he added: "We are also making some significant changes in the business and we have seen signs that our gradual renewal of the product and pricing offer is being reflected positively in our trading performance." He said he was confident the benefits would show through progressively over the next 12 months.
On Aim, William Ransom & Son, a natural healthcare company, saw its shares plunge 9.5p, or 24.7%, to 29p after it issued a profit warning. The group said a slow down in the UK consumer healthcare market would contribute to results for the first half of the year being "substantially" below those achieved at the same time last year. The firm added that UK consumer healthcare sales in the second half were expected to be satisfactory, but would probably not make up the shortfall to date. So results for the full year are also likely to be below expectations.
Plus Markets, meanwhile, fell 3p to 25p after it announced reverse takeover talks had been called off, and was restored on the Aim market. The suitor was unnamed, but there was speculation it was Project Turquoise, another alternative trading platform. Plus Markets said it had concluded that the transaction would not deliver sufficient benefits to all of the company's existing shareholders. It confirmed it was on schedule to launch its new trading and market surveillance technology at the beginning of November, which will take its stock coverage to over 7,500 securities including European liquid shares.