MONEY SAVVY WEEKEND : Savvy Confidential: A Briefing for Investors : Reuters Shares Slump as Forecasts Are Cut

Reuters Group’s U.S.-traded shares slumped 11% on Thursday after analysts who met with executives cut earnings forecasts on concern that profit growth at Reuters’ Instinet stock trading division would be slower than expected.

Reuters’ American depositary receipts fell $8.75 to close at $71 on Nasdaq.

The largest financial information provider held a meeting with analysts in New York on Wednesday. But in reaction to Thursday’s plunge, the company said, “Nothing was said at the briefings that could be construed as a profits forecast or a profits warning, and there is no price-sensitive information” to be announced.

Nonetheless, Instinet--which provides electronic equity trading and has been Reuters’ fastest-growing division--faces weaker profit growth because of a slowdown in trading volume, in part tied to rising competition from newer electronic trading systems, analysts said.

“The volumes in Instinet are quite critical to the profitability of the business, and those could potentially be quite weak in the fourth quarter,” said Meg Geldens, an analyst at Merrill Lynch who was at the meeting and rates the shares “neutral.” “I guess in the last couple of months they’ve gotten a sense from their clients that it’s really going to slow down.”

Nasdaq trading volumes were lower in July and August, Geldens said the company told analysts.

Reuters also said clients are delaying orders for information and trading systems ahead of 2000, to avoid possible computer glitches.

Instinet, the largest and oldest electronic communication network, matches buy and sell orders for stocks. As it faces more competition for Nasdaq trading it has been growing overseas, looking at ways to expand into the retail market, and investing in competitors.

In July, Instinet bought a 16.4% stake in Archipelago, a 2-year-old electronic communication network. Reuters has also led a group that owns 54% of Tradepoint Financial Networks, a British electronic stock-trading system.