Higher energy and raw material costs and the slowdown in consumer spending have beset businesses this year. Unfortunately, for investors in Associated British Foods (ABF), the company is feeling the brunt of all three.

Citing these concerns, Citigroup analysts today slashed their target price on the stock from 850p to 700p, reiterating their "sell" recommendation.

They cautioned that British Sugar, the group’s sugar processing business, would require a €170 a tonne upturn in the price of sugar to maintain profits over the next two years because of rising costs. They also issued a warning that the business model of Primark, the conglomerate’s retail success, would face a “very robust test” in 2009 as the British consumer environment deteriorates.

ABF’s shares lost 15.5p to 767.5p.

The FTSE 100 fell 37.7 points to 5334.1, dragged lower by financial stocks on continuing fears that US mortgage giants Freddie Mac and Fannie Mae will need a government bail out and that Lehman Brothers will report a huge loss when it reports earnings next month.

Lloyds TSB fell 8.5p to 281.75p, although it also went ex-dividend. Schroders lost 25p to 884p and Royal Bank of Scotland was down 5p to 209p.

Tullow Oil, up 33p to 774.5p, and Cairn Energy, up 56p to £27.93, were among the index’s top rises as the cost of a barrel of oil rose above $115.

In the second tier, housebuilders gained after Persimmon, up 34.5p to 333p, reported first-half results in line with expectations. Barratt Developments added 8p to 120.75p and Taylor Wimpey advanced 2.25p to 43.5p.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Calls grow for steep rate cut as services deteriorate
• Stagecoach shares fall 20% on rail warning
• UK broadcasters web TV 'limits competition'