Imperial Tobacco saw its shares decline this morning on the FTSE 100 after the group said it stood to lose £110 million thanks to the implementation of a ban on smoking in public places in Spain.

The ban, which came into effect at the beginning of this year, has led to tobacco companies cutting prices in Spain.

Imperial Tobacco said it too had cut prices in a bid to "protect our market position", adding that it was monitoring the situation "closely".

As a result of the price cut the group predicted that "For the financial year to 30 September 2011, adjusted operating profits derived from Spain could reduce by up to £110 million against our previous expectations. Of this, up to £40 million represents a one-off non-recurring impact on our logistics business."

The group added that, leaving Spain aside, its performance for the financial year had been in line with expectations.

By 11:55 shares in Imperial Tobacco were down 1.10 per cent on the FTSE 100 to 2,062.00 pence per share.

FTSE