Trading was a relatively brisk 17 million shares and Friday's loss took BAT's total decline over the last two weeks to 27 percent -- 20 percent in the last two days -- with the price going as low as 375 pence early in today's session. This week's decline set in after a Florida appeals court decided on Wednesday to refuse to shelter the U.S. tobacco industry in a multibillion dollar class-action tobacco lawsuit, raising the prospect of another big payout by cigarette companies over smoking-related illnesses. Philip Morris and RJR Reynolds shares promptly fell to 12-month lows and BAT -- the world's second largest cigarette company and number three in the U.S. with its Brown & Williamson division -- saw its ADRs dive. But tobacco analysts said the falls may be overdone. They said that although BAT shares must follow moves in U.S. tobacco stocks in the short term, it was puzzling that sentiment had taken such a blow after the latest legal decision. Merrill Lynch analyst Jonathan Fell said that BAT stock looked very cheap on a six-month basis. His 12-month price target is seven pounds and he rates the stock a ``buy.'' ``People seem to think the Florida decision was a decision made against the industry but it was no change from the previous position of the court and yet the stock's down 20 percent. The companies have every right to appeal on this issue at a later date,'' said Fell. Early on Friday, market speculation in London was that Philip Morris might file for protection under U.S. Chapter 11 bankruptcy laws -- a notion which added to BAT's tumble. But dealers said the rumours had shaky foundations, a company spokesman declined to comment and industry sources said the talk was wide of the mark. ``They would all be technically insolvent if they had to pay these damages in one shot but they don't. They can spread them over many years,'' said one dealer. The recent stock price fall comes at a particularly sensitive time for BAT, which is due to release third quarter figures next Tuesday. Profits were expected to rise, boosted by the first contribution from its acquisition of Rothmans. Nine-month operating profits were forecast at 1.33-1.40 billion pounds after last year's 1.26 billion. Analysts said that the underlying trading picture across the world has improved for BAT since the first half of 1999, but trading in the third quarter was still below last year's Q3 after stripping out the Rothmans effect.

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