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In a trading update released ahead of the company's interim results on July 31, the publisher of the Daily Mirror, Scotland's Daily Record and a network of regional papers, said the weaker performance during the last three months reflected the impact of the war in Iraq and incremental World Cup revenues in June 2002.

Advertising revenues suffered particularly in Scotland, London and the South East. The Scottish titles -- the Scottish Daily Mirror and the Record -- are expected to show a drop of 3.4% compared with the same period last year, while a 0.1% increase was achieved by the UK national papers.

In London and the South East, the drop is expected to be 4.4% for advertising revenues, compared with an increase of 1.2% for the other regions.

Overall, the regional division, incorporating digital media and the free Metro titles, is expected to achieve growth of 0.6% year on year for the six-month period.

Recruitment advertising has been hit hard in London and the South East, with a 12.9% fall, compared with a 3% boost in the other regions.

Circulation is also suffering. Revenues from newspaper sales are expected to fall 2.8% year on year with a 7.5% decline in the first quarter offset by an expected 2.1% increase in the second.

The shift coincides with the end of a disastrous price-cutting war instigated by Mirror bosses last year against The Sun, which ended in April and cost Trinity Mirror a reported £20m.

Mirror editor Piers Morgan's pursuit of his anti-war stance after fighting in the Gulf had begun also appears to have alienated readers. The price war and editorial stance have been blamed for the fact that by April this year the paper had lost nearly 120,000 sales year on year, while the cut-price Sun added 140,000 copies to take it to 3.5m.

According to today's announcement, circulation for the Mirror fell year on year by 5.2% for the first five months, but rose again in May by 1.9%.

Trinity Mirror said that the directors believe the uncertain external trading environment will continue for the remainder of the year, but subject to there being no further adverse market changes it anticipates a satisfactory outcome for the year.

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