Tobacco shares soar as investors get back in the habit The FTSE 100 slipped 25.36 points to 5,868.16 and the FTSE 250 lost 147.18 to 11,933.70. The blue-chip index was also weighed down by Aviva after the insurer was hit by broker downgrades from Deutsche Bank and Bank of America Merrill Lynch. They both cut their recommendations on the group on valuation grounds, following a strong showing from Aviva shares, which have risen more than 26pc since the beginning of July as investors bought into the company's restructuring story. "Even if management were to successfully deliver on the restructuring plans, Aviva's capital and leverage ratios would still be less good than most peers, with lower-than-average exposure to growth markets," said Oliver Steel at Deutsche, who cut the insurer to "hold" from "buy." Analysts at Bank of America took the red pen to their "neutral" rating and cut Aviva to "underperform." They said: "We do not see scope for a significant further re-rating, particularly given potentially dilutive restructuring efforts ahead." Investors heeded the brokers" advice and sent Aviva shares down 14.3 to 344.9p, the worst-performer on London's benchmark index. Royal Bank of Scotland was once again among the FTSE 100 fallers as another analyst weighed in with a downgrade. This time it was Cormac Leech at Liberum Capital, who cut the state-backed bank to "hold" from "buy" after a steady rise in the lender's share price this month. He followed Ian Gordon at Investec, who on Monday said RBS shares were overvalued and advised clients to "sell." The lender lost 7.3 to close at 267.1p. Across the board, however, the banks were on the back foot as traders shied away from riskier stocks. Barclays shed 2.6 to 225.4p, HSBC was 5.3 worse off at 577.9p and Lloyds Banking Group slipped 0.995 to 38.855p. Standard Chartered also fell 32½p to £14.81½p, despite Investec issuing a "buy" note, following the bank's investor day. Among the blue-chip risers, shares in Vodafone experienced a revival following concerns that the group was making provisions for a $2.2bn (£1.35bn) Indian tax bill, which knocked the telecoms group down 1.25pc on Monday. Vodafone shares also lost ground earlier this month amid worries over its dividend, but today the company added 1¾ to 175.4p, spurring hopes that the fall has bottomed out. Rehashed takeover speculation resurfaced around water company United Utilities, which rose strongly in the afternoon and closed 19 higher at 707½p - the second-best performing company on the FTSE 100. Dealers were sceptical about the rumours, that were floating around the market in August. One trader said some investors would be buying ahead of the company's forthcoming trading update, which is due on Thursday. It was a good day for defensive companies generally, with Severn Trent up 18p at £17.08. Elsewhere, Xstrata ticked up 4p to £10.57½ and Glencore added 2.35 to 373.2p as UBS forecast that a deal between the two is likely to be approved. Xstrata's board has until Monday to decide whether it will recommend Glencore's revised offer for the miner, and UBS said there is "a 60pc-plus probability that the merger will happen" because Xstrata shareholders "generally appear supportive" of the higher offer. Among the smaller companies, a profit warning from Volex prompted a 27pc drop in its shares, which closed down 67¾ at 187½p. The group cautioned that "a recent unexpected change in forecast demand" from its biggest customer, thought to be Apple, would hurt full-year profits. That had a knock-on effect on fellow Apple supplier Laird, which lost 14.1 to 229.8p, making it one of the worst performers on the FTSE 250. Elsewhere on the mid-cap index, some traders noted a report that online gambling group bwin.party is set to sell its Ongame Network to Canada's Amaya Gaming. The news had little impact on the shares, however, which ended the day 0.3 lower at 110.1p.