* FTSEurofirst 300 up 0.1 pct, Euro STOXX 50 slips 0.2 pct
* S&P downgrade to Spain pegs back European equities
* Gains at Carrefour, Burberry push some indexes into
By Sudip Kar-Gupta
LONDON, Oct 11 A rating cut that added to
concerns over Spain pegged back European equities on Thursday,
although gains in major retail and fashion stocks enabled some
key indexes to edge into positive territory.
The euro zone Euro STOXX 50 index fell 0.2
percent to 2,452.19 points, but the broader pan-European
FTSEurofirst 300 index rose 0.1 percent to 1,091.41
A creeping return of fears over Europe's sovereign debt
crisis were highlighted by the Standard & Poor's downgrade late
on Wednesday, which adds to pressure on Spain to seek a
The downgrade pushed up Spanish bond yields as well as those
of Italy, also under pressure from the region's economic
problems, and Spain's IBEX stock market fell 0.8
"We are still avoiding southern European equities, we're
sticking more to core European equity markets such as the UK,"
said Cyrille Urfer, head of asset allocation at Swiss bank
Some of those core European markets - such as Britain's FTSE
and France's CAC-40 - rose on Thursday following
gains on stocks such as UK luxury clothing retailer Burberry
and French supermarket retailer Carrefour.
Burberry, whose shares slumped last month after a profit
warning, rose 7.7 percent as it reported a rise in first-half
Carrefour rose 4.5 percent after reporting that sales in its
core French market were improving, while its Brazil business
The underlying economic uncertainty has meant that many
investors have favoured "defensive" stocks - companies seen as
the most resilient to the economic slowdown and with a large
global reach - to more "risky" sectors such as banks or miners.
"We still like the defensives, the companies with the large
franchises," said Urfer.
Equity markets have rallied since July, when world monetary
authorities including the European Central Bank (ECB) pledged
new measures to fight off the effects of the euro zone crisis
and global economic slowdown.
However, markets have fallen back from peaks reached in
mid-September due to uncertainty over the timing of any eventual
Spanish bailout request, as well as worries that the central
banks' actions have failed to stem the economic slowdown.
"We're continuing to see weaker economic numbers and the
euro zone issues are still there. The euro zone will dominate
the month of October," said TJ Markets' head of trading Manoj
Adrian Slack, head of equities at Bastion Capital, said he
still expected European equity markets to remain under pressure
for this month.
Slack said the Euro STOXX 50 could fall down to around 2,396
points, while Germany's DAX could go down to the 7,151