Ads patchy for Daily Mail

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The company, which has diversified by buying dozens of small online and business to business companies, said on Thursday that ad revenue for its Associated Newspapers unit was down 6 percent for the 11 months to August excluding acquisitions and circulation revenue was up 1.6 percent.

"Overall, despite the weakness of consumer advertising markets, the launch costs of our new London free newspaper and the impact of the weaker U.S. dollar, we still expect to achieve modest progress for the full financial year compared to last year," the company said in a statement.

After a difficult July and August for advertising, prospects may be on the uptick, however, for the publisher of the Daily Mail and Mail on Sunday, and the Evening Standard.

"September's looking a bit better and we look to be outperforming our peers by a narrow margin," Finance Director Peter Williams told reporters.

Daily Mail shares were down 0.9 percent at 08:50 GMT (9:50 a.m. British time) to 582 1/2 pence.

"The shares continue to look good value, with around 12 percent upside to our 660 pence target price," Panmure Gordon analyst Alex DeGroote said in a note following the trading update.

The publisher has engaged in a cut throat afternoon freesheet war with Rupert Murdoch's News International, pitting its London Lite against thelondonpaper for commuters.

About 390,000 copies of London Lite are being distributed, just short of the company's 400,000 target, Williams said.

"We don't see this as being enormously expensive for us," he said, rejecting some of the cost estimates issued by analysts but declining to provide any specific figures.

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