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STOCKS NEWS EUROPE-ITV weak after update, broker downgrade

Shares in ITV ITV.L lose 3.8 percent, the third biggest FTSE 250 .FTMC faller, as cautious outlook comments offset a solid Q3 trading update, prompting KBC Peel Hunt to cut its rating for the broadcaster.

ITV is cautious about the outlook for 2011 and expects advertising revenue growth to slow to 10 percent this quarter, after a 16 percent rebound in the last quarter helped by soccer’s World Cup.

“ITV has reported an IMS that shows a strong recovery in Q3 2010 TV advertising revenues, with better momentum into Q4 than expected. But, the outlook remains cautious and we are mindful of the consumer environment,” KBC Peel Hunt says in a note.

The broker keeps its forecasts for ITV unchanged for now and holds its target price at 75 pence, but cuts its rating back to “hold” from “buy”.

Meanwhile, Ed Woolfitt, head of trading at Galvan Research says it is clear from the update that the strong recovery in TV advertising continues to drive ITV forward, but with the uncertain outlook, Galvan feels some caution would be well advised at this juncture.

“The shares have enjoyed an exceptionally strong run since August, but Galvan take the view that now is as good a time as any to take profits, while still aiming to pick up stock on the dips.”

For more on ITV’s update, double click on [ID:nLDE6AF09T]

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

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