The company said on Tuesday that overall like-for-like sales were up 1.6% in the five months to 21 September compared to the same period last year, driven mainly by 6% growth in its music stores in continental Europe.

But north American music sales fell by 7.6% over the same period, while sales at the company's Waterstone bookstore chain also faltered.

HMV chairman Eric Nicoli said the firm remained on track to hit its financial targets for the year, helped by a strong release schedule in the run-up to Christmas.

Rock 'n' roll christmas

Christmas sales are expected to get a boost from new albums by popular artists such as Robbie Williams, Elvis Presley, and the Rolling Stones.

But City investors were unconvinced, marking HMV shares 7% lower to 124p in lunchtime trade.

The decline marked a further setback for the group, which failed to meet its 192p target price when it first floated on the London Stock Exchange in May this year.

Music sales have slowed worldwide because of deteriorating economic conditions.

HMV's sales were also hit over the summer by the World Cup football tournament, which kept many music lovers glued to their television screens.

But the pressure on the company's share price also reflects concerns that the growing availability of downloadable music on the internet could spell the end of traditional music retailing.

HMV shareholders are due to hold their first annual meeting later on Tuesday.