The world hotel market is suffering from the impact of the Iraq war

The share was the worst performer in London's FTSE 100 index, closing 7% lower at 372 pence.

"We see Intercontinental as unlikely to get any bid speculation and its earnings outlook is weak," said Mark Reed, an analyst at stockbroker Teather & Greenwood.

The company, whose brands also include Crowne Plaza and Holiday Inn, was formed when UK leisure giant Six Continents split into separate hotels and pubs companies.

Shares in Mitchells & Butlers, the pubs company, finished the day at 222.5p, down 1%.

The company's assets include the All Bar One and O'Neills bar chains and Harvester restaurants.

Rejected

The break-up of Six Continents, formerly known as Bass, came after shareholders rejected plans for a takeover of the whole business by pubs and restaurants entrepreneur Hugh Osmond.

He had argued that only his offer could unlock the value in Six Continents while the company's management had failed shareholders and presided over a collapse in the firm's share price.

Shareholders voted overwhelmingly to reject Mr Osmond's offer and back the demerger.

Analysts said the international hotels market, already suffering from world economic slowdown, had been hit by the impact of the war on Iraq and the deadly Sars virus in Asia.

This made a takeover bid for newly-formed Intercontinental unlikely, they said.