STOCKS NEWS EUROPE-Inchcape weak; HSBC downgrades

Shares in Inchcape (INCH.L) sheds 4.1 percent, the biggest midcap .FTMC faller, as HSBC Securities downgrades its rating for the motor dealer to "neutral" from "overweight" citing valuation grounds.

The broker raises its target price for Inchacape to 21 pence from 19 pence but says that on all valuation measures it applies, the shares "look up with events".

HSBC notes that Inchcape's trading update, unveiled on Wednesday, showed that the group's global diversification has provided little insulation from the impact of the credit crisis.

The broker adds that news of the resignation of Inchcape's finance director, announced at the end of May, is also unsettling.

On Wednesday, Inchcape reported a sharp drop in sales over the last five months, but said trade in Britain had improved after unprecedented falls and that it was starting to benefit from its cost cutting programme.

Reuters Messaging rm://jon.hopkins.reuters.com@reuters.net