LONDON (AFX) - Shares in UK smaller companies closed sharply lower, at their worst levels for the day, mirroring weakness in the broader market, with TV Commerce a major casualty on fears the company may delist in the face of increased regulatory intervention, dealers said.

At the close, the FTSE Small Cap index was 32.9 points weaker at 3,700.8, the session low, having reversed from a peak of 3,734.8.

Meanwhile the FTSE 100 index ended 17.9 points weaker at 6,122.1, albeit well off hefty midmorning lows.

TV Commerce was the major small cap casualty today, sliding 1.88 pence lower, or nearly 54 pct, to 1.62 as the company said in a trading statement that it is mulling going private on the back of increased regulatory intervention.

The company said it has been informed by its telephony service provider that the Independent Committee for the Supervision of Standards of Telephone Information Services had issued a formal reprimand and a fine of 25,000 stg in relation to a live telephony service, promoted by its daytime show, which has since been taken off air.

Trading has been profitable in the second half of the year to date, but given the increased intervention of the regulator in this market, the board is concerned for the future viability of the company's existing business model.

The directors and their advisors are, therefore, currently reviewing the options available to the company in relation to the preservation and return of shareholder value.

Such options may include the possibility of taking the company private and delisting its shares from AIM.

Also on the downside, Adept Telecom shares dropped 33-1/2 pence lower to 69-1/2 after the company warned its full-year results are expected to fall short of market expectations in the face of stiffer competition.

The company said in a trading update, which was issued in response to its recent share price fall, the telecoms market has come under pressure from free broadband offerings and packaging of fixed-line with mobile services.

Meanwhile shares in packaging company Robinson shed 12-1/2 pence to 75 after the group revealed that its contract to supply paperboard containers to Goldenfry Foods will not be renewed when it expires at the end of 2006.

Robinson said that winning the new contract would have resulted in unacceptable margins, due to the "highly competitive pricing environment".

The contract was worth around 3 mln stg a year, and accounted for around 0.75 mln stg of the company's fixed costs, it said.

Chief executive Jon Marx said Robinson "will continue to pursue other opportunities to offset this loss" and will review its costs in order to minimise the future impact on profits.

And shares in Axeon Holdings lost 3 pence at 51-1/2 after the company, which provides green energy and advanced control systems to the automotive and industrial markets, warned its 2006 revenue will be between 2.8-3.0 mln stg, lower than originally anticipated. It believes 2007 revenue will be more than double that of 2006, however.

Meanwhile, the company said it has won a 1.3 mln stg order to supply Modec with the first 50 battery packs commissioned for the latter's zero emissions vehicle. Modec has chosen Axeon as its exclusive supplier of battery packs and has indicated it will produce 700 vehicles in 2007.

Axeon also announced "successful" initial trials of the Lithium-ion battery system Modec contracted it to develop. It added that the system will be ready for production towards the end of the second quarter of 2007.

On a brighter note, shares in Surface Transformations topped the small cap leaders board, up 3-1/2 pence to 16 - a 28 pct jump in value -- after the group announced that its managing director, Kevin Johnson yesterday acquired 22,500 shares in the company at 14-1/2 pence each, a 0.16 pct stake, taking his total holding to 0.57 pct.

Share buying by directors also gave a boost to Intelek shares, up a penny at 14-3/4, and those of Medical Solutions, up 0.88 pence to 7.75.

Elsewhere an investee update gave a lift to Brainspark shares, 0.10 pence firmer at 0.67 -- a 17.5 pct jump in value.

TraderServe, a City-based company in which Brainspark holds a 34.6 pct holding, has launched a new range of products for compliance with MiFID Best Execution Requirements.

This, said Brainspark, is a significant development for TraderServe after a long period of development and is expected to be adopted widely by Investment Managers seeking to comply with FSA requirement on Best Execution.

Geong International edged 3 pence higher to 32 after the AIM-listed, Beijing based, provider of content management software and solutions said its wholly-owned subsidiary, GEONG Business Networks, has signed two agreements with IBM Global Business Service to provide its PortalAge based solutions to Motorola China Electronics.

The value of the contracts total about 153,000 usd, Geong said.

And shares in Uranium Resources added 0.25 pence at 2.75 after the group said it has informed former director Dr Leon Pretorius and Deep Yellow, the company at which he is currently a director, of legal claims it is considering filing against them.

According to Deep Yellow, Uranium Resources alleges that Pretorius breached confidentiality clauses and financial duties to his former company by directing the acquisition of Raptor Minerals to Deep Yellow.

Both Deep Yellow and Pretorius deny the allegations in the claim, which they believe is without merit, Deep Yellow said.

Meanwhile fellow miner Oxus Gold gained 2-1/4 pence at 28-3/4 following news that Romaltyn, its 50:50 joint venture with KazakhGold Group, has bought the assets of the Transgold Plant and deposits in the outskirts of Baia Mareis in Romania for 6.99 mln usd as part of its strategy to operate in eastern Europe and central Asia.

After recommissioning by Romaltyn in about six months, the project offers the option to generate payback on investment and provides an opportunity for exploration and development of additional resources, the company said.

Elsewhere Tecteon shares put on 0.25 pence at 3.12 after the developer of Digital Signal Processing software and hardware for audio speech enhancement and hearing protection technologies said it will be demonstrating its enhanced acoustic shock limiter technology at the Acoustic Safety Programme conference in Glasgow during 27 and 28 November 2006.

News of a change of adviser lifted LTG Technologies shares, with Seymour Pierce appointed the firm's Nominated Adviser and Broker with immediate effect.

And Renova Energy shares added 15 pence at 230 after the group said it remains on target to achieve its medium term goals as it reported a more than doubling of pretax profit in the first half.

Renova said its first half pretax profit rose to 1.1 mln usd compared with 0.5 mln usd a year earlier, with turnover increasing 71 pct to 12.0 mln usd. newsdesk@afxnews.com jmh/tc

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