Tiffany unsettles Burberry

On a desperately quiet day in the City - only one blue chip stock, ITV, managed a gain of more than 3% - traders had no option but to look lower down the market for some interesting stories and share price action.

Burberry, the luxury goods company, was one stock on the move, dropping 18.75p, or 5.2%, to 344p - the second biggest faller in the FTSE 250. It was unsettled by second-quarter figures from Tiffany.

Overnight the upmarket US jeweller posted an 11% drop in second quarter earnings, which it blamed on weak sales in Japan. The news wiped 15% off its market value and had a similar impact on Burberry, which analysts were quick to point out draws about half of its profits from Japan.

Homestyle, the debt-laden home furnishings group that put its beds division up for sale this week, firmed 1.5p to 105.5p.

The rise came after Jersey-based Formal Property Management Services (FPMS) an nounced the purchase of a further 350,000 shares, taking its holding in the company to 7.3%. The stake is significant because FPMS is thought to have close links with Steinhoff International, the South African furniture supplier which last year acquired the bedmaking arm of Airsprung Furniture. Indeed, FPMS appeared on the share register of Freedom Furniture, an Australian retailer, shortly before it was acquired last year.

Market gossips believe Steinhoff recently made an offer for Homestyle's bed division which was rejected by the company.

In the wider market, leading shares closed lower, pressured by the high oil price and Wall Street's woeful overnight performance. The FTSE 100 finished the day 26.6 points adrift at 4301.5, taking its losses over the week to 36 points. This performance means the Footsie has ended lower in seven out of the last eight weeks.

The FTSE 250 dipped 12.4 points to 5857.3, while the FTSE Small Cap index eased 2.1 points to 2430.6. Market turnover was once again very poor with 2bn shares changing hands. In the bond market, gilts saw small gains thanks to US data showing benign producer price inflation, a record trade deficit, and a dip in consumer confidence.

The benchmark 10-year gilt closed at 100.510, yielding 4.935%.

Companies that generate a large chunk of their profits in South Africa were the session's worst performers as the rand continued to weaken against leading currencies in the wake of Thursday's surprise half-point rate cut from the country's central bank.

Old Mutual, the financial services company, eased 2.25p to 98p, while brewer SABMiller, fell 11p to 657p. A weak rand is bad news for these companies because their earnings fall when they are translated into sterling or, in the case of SAB, the dollar. Investec Securities estimates that every 3% fall in the rand knocks 1% from SAB's profits

Vodafone, up 0.75p to 119p, managed to buck the weak market trend after Cazenove repeated its buy recommendation following a meeting with chief executive Arun Sarin. Questioned on uses of cash, Mr Sarin played down the likelihood of a material acquisition in the near future and hinted at dividends as a means of increasing returns to shareholders.

ITV rose 3.25p to 101.75p as rumours continued to swirl around the market that next month's half-year figures could be accompanied by news of a special dividend or share buyback.

Millennium & Copthorne Hotels gained 8.5p to 312p after announcing the sale of its 50% stake in the New York Plaza Hotel, where film stars Michael Douglas and Catherine Zeta-Jones held their wedding reception. Although Millennium is only likely to book a £75m-£80m profit on the deal, the sale could be a sign that the company has the appetite for further disposals.

Alongside last week's interim figures, Kwek Leng Beng, Mil lennium's chairman and 52% shareholder, revealed the company, which trades at a big discount to net asset value, was carrying out an asset-by-asset review of its portfolio.

Elsewhere, Retail Decisions, the credit card fraud detection and payment specialist, lost a quarter of its market capitalisation after its Nasdaq-listed rival CyberSource Corporation announced that it had filed a patent infringement lawsuit. The suit alleged that Retail Decisions' ebitGuard product used technology covered by a Cybersource patent.

After the market closed, Retail Decisions, which recently poached a senior member of staff from Cybersource, responded to the fall in its share price by stating that in the first seven months of its current fiscal year ebitGuard accounted for3% of group turnover and considerably less of operating profit. It also said that the claim had no foundation. Retail Decisions ended 4p lower at 13p.

Headway, the workspace provider, eased 0.5p to 100p despite talk that Trefick, the investment vehicle of serial stakebuilder Jack Petchey, had acquired a further 9.9% of the company, taking its stake to nearly 25%.

On Aim, Regal Petroleum advanced 9.5p to 406p after increasing its holding in Kavala Oil, the vehicle which controls a number of its licences in Greece, to 81%.

According to house broker Evolution Beeson Gregory, the deal will have a material impact on Regal's oil and gas reserves and consequently the company's net asset value, which it now puts at 613p, up from 469p.

Regal also said it was in the final stage of analysing the latest seismic data from its Kallirachi discovery.

Fundamental-E the same

Fundamental-E Investments, the Aim-listed investment group at the centre of a Financial Services Authority investigation, marked time at 2.25p despite the appearance of Pershing, the clearing house used by many smaller brokers, on its share register with a near 30% holding.

It is thought that Pershing has come to own the shares because it has been unable to settle trades made through SP Bell, a tiny stockbroking firm once owned by Simon Eagle, who until recently was also chairman of Fundamental-E.

SP Bell and its parent company, Forum Finance, were to be acquired by Merchant House, another Aim-listed investment company, until talks were aborted last month, due to a "substantial and material change" in the financial position of SP Bell.

Shortly after that the FSA revealed it was investigating secondary market trading in Fundamental-E before July 15.

Dealers believe Pershing is looking to sell the stake, and market-makers have already made an offer for shares - albeit at a level below the current price.