WPP nears a five-year low as US investigates media buying

EMBATTLED giant WPP neared a five-year low on fears that the world’s largest ad company could be targeted in a US inquiry into controversial media-buying practices.

Federal prosecutors in the States have started to issue subpoenas to investigate highly profitable ad-buying practices, according to The Wall Street Journal. Marketing firms snap up media inventory or spaces where advertisements can be shown, such as TV or newspaper slots.

Ian Whittaker, a Liberum analyst, predicted that the investigation will centre on the shadowy practice of rebates, a “very opaque space” in the sector and the focal point of a 2016 industry report into media buying. It has been claimed that marketing agencies are given cash or other kickbacks from media companies for purchasing ad space.

WPP is the biggest ad buyer in the US, with its media business making up about 45pc of the company’s profit, Mr Whittaker added.

As talismanic former boss Sir Martin Sorrell made his stock-market return with his new venture, WPP continued to struggle following his exit, its shares closing 22.5p lower at £11.25. It trimmed heavy early losses after Accenture’s boss admitted it could be interested in some of WPP’S assets.

Elsewhere, Europe’s banking sector was rocked by the stocks rout in Italy as the Euro Stoxx Banks Index suffered its second-worst day of 2018, sliding 3.9pc. Italy’s ruling populists set up a standoff with the EU after striking a budget that will ramp up spending.

London’s banks weighed heavily after being hit by fears spilling over from the Continent, a UK growth downgrade and another spike in Brexit jitters as Tory infighting resurfaced. RBS and Lloyds slumped 5.6p to 250p and 1.7p to 59.3p respectively, while Barclays tumbled 4.9p to 171.8p. The wider FTSE 100 swerved the worst of the sell-off on markets. The pound’s weakness helped the index drop just 35.24 points to 7,510.20 while Milan’s FTSE MIB plummeted 3.7pc.

Spire Healthcare slid 5p to 142.5p, a fresh record low, after Barclays piled on the pressure by predicting the private hospital operator will issue more earnings downgrades. The FTSE 250 company has been hit hard by NHS belt-tightening as referrals from public services decline. Barclays said it had “underestimated the magnitude of this impact” and warned “further downgrades to numbers are likely”.

Thomas Cook shares took another tumble after HSBC cut the travel firm to “hold” in the wake of Monday’s profit warning. Rival Tui’s stronger performance highlighted the “need for scale and flexibility in the touroperator model”, its analysts told clients as Thomas Cook slipped 3.3p to 57.9p. Fantasy figurine maker

Games Workshop was pulled away from recent record highs after its former chairman cashed in on a 1.7pc stake for £20m. The sale by the mid-cap firm’s fourth-largest investor weakened its shares 165p to £37.85.