Disappointment over rising costs at retailer Boots and a profit warning from grocer Sainsbury helped drag Britain's top shares lower on Friday, and dashed hopes for a swift recovery at both firms.
The FTSE-100 ended down 16.1 points, or 0.4 percent, at 4,357.5 - reversing some of Thursday's 64-point bounce off a four-month closing low.
Retailers crowded the list of blue chip fallers, with Boots the hardest hit, nursing an 12.7 percent fall after it said its store investment programme would hit profits this year and next.
Smith Barney downgraded its stance on the stock to "sell" in response, while Boots' house broker Merrill Lynch cut its price target and estimates for 2004 and 2005.
Sainsbury slumped more than seven percent after saying its profits would be hit by price cuts as Britain's third biggest grocer attempts to keep up with rivals like sector-leader Tesco.
The disappointing news knocked confidence elsewhere in the sector, leaving both Dixons and Tesco around two percent poorer.
"Corporate earnings are going to have to carry the market forward, so obviously any feeling that things aren't as good as people hope they are is going to set it back," said Stuart Fraser, investment director at Brewin Dolphin.
He added that Boots' drop was overdone: "The complaint about Boots has been over a long time that they haven't invested, they've diversified into lots of different things that have not worked. Here we have new management refocusing on the core business - and the market punishes it."
Shares in packaging firm Bunzl also fell, shedding four percent after it said it had withdrawn from the competition to buy packaging and vending machine firm Autobar.
In contrast British Airways climbed 3.7 percent after analysts at Credit Suisse First Boston said an "overly cautious outlook" from the airline's management was now reflected in the share price.
Mining stocks also provided a floor as they continued their recent run higher on signs of increasing demand from Asia.
BHP Billiton rose 2.9 percent and Xstrata added 2.3 percent. Rio Tinto and Anglo American both added more than one percent each.
Brokerage Investec raised its price forecasts for a number of commodities, including copper, gold, cooking coal and palladium and upgraded Anglo American to "buy".
Among mid-caps, shares in Northgate Information Solutions, which recently entered the mid-cap 250 index led gainers with a rise of 6.4 percent, buoyed by news late on Thursday that directors bought shares in the software company.
Engineering firm Bodycote rose 4.8 percent as several institutions revisited the stock following weakness triggered by the announcement of a rights issue earlier this month, dealers said.
"They were under a little pressure on the back of the cash-raising, but the market's had a chance to have a look at it, and decided it's gone far enough," one trader said.
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