Financial upheaval takes its toll on Collins Stewart

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Shares in the group dropped more than 10% as it said that profits in its securities division, which makes markets in shares and trades for institutional investors, would not make any profit in the current year.

Rival brokers rushed to downgrade their forecasts. The firm's house broker cut its profit forecast for this year by a third to £16.9 million, while Peel Hunt slashed its forecast 40%-50% to between £15 million and £18 million.

Collins Stewart said: "Although its premature to reach a final view, the securities division is unlikely to be able fully to recoup the impact of recent poor trading before the end of the current financial year. We have, however, reduced the size of our trading book to guard against further turbulent markets."

The company also said that despite losses in the securities business it had continued to trade profitably overall.

Hawkpoint, the corporate adviser, has had a good year as has wealth management, but corporate broking has suffered from a lack of major deals.

Sources suggested that the trading losses were unlikely to lead to major job losses, but added that the firm "is keeping a tight control on costs".

The losses make it virtually certain that there will be little or no bonuses paid in that division this year.

Collins Stewart Hawkpoint shares fell 71½p to 61½p.

They have fallen from 90p at the start of March as the financial crisis has gathered pace.