Bloomsbury loses its magic touch after late profit warning

SHARES in Harry Potter publisher Bloomsbury slumped 29 per cent yesterday after the company warned late on Monday that its profit for this year could fall by as much as 75 per cent following weak Christmas sales.

Analysts at Numis Securities cut their 2006 pre-tax profit estimate from 20 million to 5m as a result.

There is also uncertainty about 2007 profits as the launch of the last Harry Potter book is unknown. Shares closed down 90p to 220p.

The rest of the market struggled for direction after interest rate fears were reignited following higher-than-expected inflation figures, up 2.7 per cent in November.

It meant the FTSE 100 index spent most of the day in the red and finished 3.4 points down at 6,156.4 as economists suggested a rate rise could come as early as February.

Heavyweight financial and oil stocks also weighed on the market, but retailers showed some shoots of recovery after two research companies said the number of people visiting the high street was up on the previous weekend.

Marks & Spencer lifted 12.5p to 697p, while Next was up 5p to 1,756p and Alliance Boots was 8p higher at 820p as they looked to banish the pre-Christmas high street blues.

Tesco, which extended its presence in China by taking hold of a joint venture, was up 3.75p to 389.5p. Rival Sainsbury's lifted 3.75p to 400.75p on a decision to only sell Fairtrade bananas, another notch in its business turnaround campaign of promoting ethical and fresh foods. Morrisons added 1.75p to 259.5p.

Meanwhile, shares in Cadbury Schweppes crept 1 per cent higher, up 7.5p, to 542.5p, after its trading update reiterated guidance given in October despite problems in Nigeria and the UK.

Rumours also circulated that it could be bid for by US peer Hershey.

Vodafone joined the risers board with a gain of 2.75p to 141p, while chemicals group ICI was 12.25p higher at 435.75p after speculation that it could be a bid target following the sale of its Quest fragrances business.

Banking stocks were on the slide with Alliance & Leicester down 11p to 1,111p and Barclays off 7p to 716p as investors banked profits following a strong rise in the light of apparent takeover interest from Bank of America. HSBC was also off 3p at 920p. Elsewhere, Drax fell 2.7 per cent, or 21.5p, to 816.5p as traders predicted a downbeat trading statement today from the power company that owns Europe's largest coal-fired power station. Energy provider International Power also lost ground, off 3 per cent, or 11.75p, to 375p while British Energy gained 5p to 482.5p.

BP was down 4p to 580.5p amid ongoing concerns in the US over the investigation into the explosion at its Texas City refinery last year. Royal Dutch Shell was off 21p to 1,803p after ongoing problems in Russia.

In the mid-caps, newspaper publisher Johnston Press slipped 32.5p to 391p, a fall of 7.7 per cent, after it said advertising revenues remained under pressure.

Support services group John Menzies slipped 6.25p to 469.5p after it said that its newspaper and magazine distribution arm was performing in line with expectations, despite a "changing and challenging market".

Meanwhile, aerospace engineering business GKN fell 0.75p to 282.5p, despite guidance that profits to the end of November were slightly ahead of last year.