EUROPE MARKETS: Europe Stocks Edge Up; Commerzbank Downgraded

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- Ratings downgrades for utility stocks in Europe and for German financial firm Commerzbank AG on Thursday limited a gain for Europe's equity benchmark, but the move was enough to keep the index at a six-year high.

Trading volumes were lighter than usual as markets in Austria, Switzerland, Denmark, Finland, Iceland, Norway and Sweden were closed for the Ascension Day holiday.

The benchmark Stoxx Europe 600 ended up 0.1% to 344.51 after spending the session darting between small gains and losses. The index on Wednesday shed 0.1%, marking its first loss in six sessions.

Shares of Enel SpA and Endesa SpA ranked among Thursday's biggest decliners, falling 1.8% and 1.4%, respectively. Citi downgraded utility Enel to a sell rating, saying the company's equity story, predicated on per-share earnings and dividend per-share growth, will in part be challenged by declining supply margins in Italy and Spain. Spanish utility Endesa's rating was also cut to sell after a strong price-share performance and reduced earnings expectations.

Citi cut Energias de Portugal to sell, prompting its shares to decline 0.9%.

The Stoxx 600's worst price performer on Thursday was Kingfisher PLC as its shares fell 4.9%. The home-improvement retailer's first-quarter trading update showed growth in total sales to 2.8 billion pounds ($4.7 billion), but the company also noted ongoing weak consumer confidence in France, one of its largest markets. Kingfisher's properties include B&Q, Screwfix and Castorama.

Also hit were shares of Commerzbank AG , down 2.3% after Exane BNP Paribas cut its rating on the financial institution to neutral from outperform. Exane said it upgraded Commerzbank nine months ago as it believed there was a "reasonable chance" that Commerzbank would pass a European Central Bank stress test. "While our view has not changed dramatically, the combination of lower earnings and a more challenging capital path has weakened our conviction," said Exane in a note to clients.

Commerzbank was the biggest decliner on Germany's DAX 30 index , which slipped less than 1 point to 9,938.90. The DAX earlier this week reached a record high.

Meanwhile, Smith & Nephew PLC topped advancers on the U.K.'s FTSE 100 index with a 3.6% move higher. The head of Stryker Corp. (SYK) told Fox Business the medical-devices company had been working on a bid for the London-based artificial joints maker. On Wednesday, Stryker issued a statement saying it hadn't made an acquisition offer.

A potential acquisition of Boston-based asset manager Numeric Holdings by Man Group PLC sent shares of the British hedge-fund manager higher by 5%. A transaction would likely be done by cash only as Man has a large cash balance, and cash transactions are typically "highly accretive," wrote RBC Capital Markets analyst Peter Lenardos in a report. A deal would move Man further away from its AHL hedge fund, and be in line with Man's strategy to buy an asset manager based in the U.S., he said.

"However, given the extremely limited information available, especially on profitability and price, we reserve judgment until more details emerge," said Lenardos.

In other developments, Spain cut its economic-growth forecast for the first quarter to 0.5% from a previous estimate of 0.6%. Spain's IBEX 35 closed down 0.2% at 10,734.80.

In France, France's CAC 40 fell 1.1 points to 4,530.51.

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