October 7, 2016 / 4:35 PM / 3 years ago

Continental European stock markets slip, underperform UK's FTSE

(ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets) Adds closing prices)

* STOXX 600 ends at one-week low

* UK’s FTSE 100 rises as sterling loses more ground

* Edenred falls after UBS downgrade

* RWE slumps as Innogy unit debuts

By Sudip Kar-Gupta

LONDON, Oct 7 (Reuters) - Continental European stock markets fell on Friday, with vouchers company Edenred and airline easyJet among the worst performers, although a new slump in sterling propped up Britain’s FTSE 100.

The pan-European STOXX 600 index ended down by 0.9 percent at a one-week low. The STOXX 600 has fallen by around 7 percent since the start of 2016.

“European stocks look utterly uninteresting to me at the moment. Corporate profits are weak and the economy remains weak as well,” said Andreas Clenow, chief investment officer at Swiss-based ACIES Asset Management.

Edenred fell 7.2 percent after UBS cut its rating on the stock to “neutral” from “buy”. EasyJet fell 3.3 percent after broker downgrades following its profit warning on Thursday.

However, the FTSE 100 managed to gain 0.6 percent, since the slump in sterling should benefit exporters and help the index’s international companies .

Sterling slid on new concern that British Prime Minister Theresa May’s government will back a “hard Brexit” where Britain leaves the European Union’s single market in order to impose controls on immigration.

That could hinder inward and outward trade and constrict the foreign investment needed to fund Britain’s current account deficit, one of the biggest in the developed world.

Concern over European banks were also weighing on stocks, said Francois Savary, chief investment officer at Geneva-based fund management and consultancy firm Prime Partners.

Deutsche Bank edged up 0.5 percent after sources said Qatari investors who own the largest stake in Deutsche Bank do not plan to sell their shares and could consider buying more if the embattled German bank decides to raise capital.

Its shares however remain near record lows as the bank is fighting a fine of up to $14 billion from the U.S. Department of Justice over the alleged mis-selling of mortgage backed securities.

Investors are also concerned about bad debts in the Italian banking system.

“Europe seems to offer value, but concerns over the financial system and political uncertainties - particularly with the French and German elections next year - call for caution,” said Savary, who has reduced his European equity allocation.

RWE fell 7.4 percent after shares in its Innogy debuted on the stock market struggling for most of the session to move above their issue pricey, reflecting the limited growth potential for its businesses. (Additional reporting by Atul Prakash and Danilo Masoni; Editing by Andrew Heavens)

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