WH Smith hit a four-week low yesterday, unsettled by fears that it could suffer another poor Christmas.

Last year, analysts were forced to lop about 40% off their forecasts after the company admitted sales had slumped because of increased competition from big supermarket groups and specialist book and music-sellers, such as HMV, up 0.75p to 248.25p, and Waterstone's.

Nick Bubb, analyst at Evolution Securities, reckons WH Smith's new advertising campaign is not working and believes the competition will again overwhelm the company, now run by the former Argos executive Kate Swann, this year.

On top of that, Mr Bubb says reports from the trade press suggest that book sales at WH Smith's have been dire. As a result, he has downgraded his rating on the stock to "sell" and taken £10m off his already below consensus pre-tax profit forecast of £60m.

WH Smith, which received a 375p-a-share cash offer from the private equity group Permira in the spring, closed 8.5p weaker at 316p.

In the wider market, leading shares closed lower as the drug sector and AstraZeneca in particular took a fearful battering after the top safety official at the US food and drug administration said the agency had failed the American people and listed five drugs on sale that he believed were potentially dangerous. Two of these were Crestor, AZ's cholesterol-lowering drug, and Glaxo's asthma treatment, Serevent.

The final scores showed the FTSE 100 down 44.5 points at 4,760.8, with AZ - off 222p, or 9.4%, at £21.45 - and GSK, 45p lower at £11.47, responsible for about 30 points of the fall. Over the week, the blue-chip index lost 32.6 points.

Elsewhere, the FTSE 250 eased 4.7 points to 6,599.6, propped up by a strong performance from EMI, which rose 31.25p, or 15%, to 239.75p as short-sellers were forced to close their positions after the music group said it was on course to meet full-year earnings expectations. Meanwhile, the FTSE Small Cap index fell 1 point to 2,691.1. In the bond market, the benchmark 10-year gilt closed at 102.480, yielding 4.678%.

The supermarket group William Morrison, which was weighed down by weak market share data on Thursday, remained under pressure. Yesterday's poor performance was caused by Deutsche Bank slapping a "sell" rating and a 205p target price on the stock.

After Morrison's recent strong run - the shares have gained 20% since interim re sults a month ago - Deutsche reckons it is now fully valued heading into what is likely to be a difficult Christmas trading period for the company and food retailers in general. Morrison closed 3p lower at 224p.

Elsewhere, Cookson, the printed circuit-board specialist and FTSE 250 constituent, fell 1.5p to 34.5p after its joint house broker, Cazenove, said the shares were likely to mark time following their recent gains. Cookson was trading at 30p before this month's third-quarter trading update.

In addition, Cazenove believes Cookson will have to sell its precious metals division if it wants to pay dividends and make acquisitions in the future. Nick Salmon, Cookson's new chief executive, is due to outline his strategy for the company early next year.

The budget airline easyJet was marked 2.25p higher at 179.75p as the City picked up on the fact that the founder and majority shareholder, Stelios Haji-Ioannou, had this week dined with Hannes Smarason, the chairman of Icelandair, which recently raided the market for 10% of easyJet's shares. Traders said such meetings would fuel talk that the men, who control more than 50% of the company between them, might join forces and take easyJet private.

Premier Foods, the company that makes Branston Pickle and Ambrosia custard, eased 1.5p to 238.5p despite talk that an acquisition - possibly of Marmite from Unilever, down 2.25p at 487.75p - is on the cards. At the time of interim results in September, Premier said it was looking to buy quintessential British brands to increase its portfolio.

Mersey Docks & Harbour fell 29p to 881p on concerns that the mystery private equity bidder may not pay the £11-a-share price that some of the biggest shareholders are rumoured to be demanding.

Among the smaller companies, ebookers broke through the 300p barrier amid talk that the company is set to recommend a 330p-350p-a-share offer from either Cendant or Priceline.com. The shares rose 15.5p to 310.5p, pulling rival Lastminute.com up 3.75p to 123p, the thinking being that if ebookers gets taken out, Lastminute will soon follow.

Television Corporation, the production company responsible for Channel 4's Test cricket coverage, gained 4p to 97p - its highest level since March - after John de Mol's Talpa Capital declared the purchase of 1.25m shares, taking its stake to nearly 17%. Talpa's latest purchase comes amid speculation that Channel 4 and the satellite broadcaster BSkyB, 9p higher at 557.5p, have reached a deal on the broadcast rights for cricket coverage from 2006.

On Aim, RAB Capital, the hedge-fund manager, was marked 1.25p lower at 45.5p, as some traders took the view that Thursday's after-hours trading statement constituted a mild profits warning.

In fact, the statement, which should not have been released until yesterday morning, actually triggered an upgrade from the company's broker, KBC Peel. It now expects RAB, which made pre-tax profits of £10.6m last year, to post profits of £12m this year. KBC had forecast profits of £9.6m.

Rumours that next week's half-year figures will impress saw the Accident Exchange, which leases prestige cars to motorists involved in no-fault accidents, gain 4.5p to 188.5p.

Fat pill swells Phytopharm

Not everything in the drug sector was heading south yesterday. The small-cap company Phytopharm, which is developing an anti-obesity drug based on an African remedy from the Kalahari, managed to close 8.5p higher at 160p.

The rise came as City traders picked up on the fact that CBS News will air a programme on the Hoodia gordonii cactus plant tomorrow in which Phytopharm and its weight-loss pill, P57, will be featured.

With up 24 million viewers expected to watch the programme, Erling Refsum, an analyst at Nomura, reckons it could trigger significant demand for Phytopharm shares, especially as they have a Level-1 listing on the US Nasdaq market.

Mr Refsum also thinks the long-awaited consumer licensing deal for P57 may not be far off.