UKX FTSE 100 Index

By Carla Mozee, MarketWatch

RBS loses ground after downgrade

U.K. stocks edged higher Monday, with easyJet PLC gaining after a ratings upgrade, but a downgrade led investors to kick down the value of Royal Bank of Scotland PLC's stock.

The FTSE 100 index was up 0.2% to 7,033.51, but it had been up by much as 0.7%.

"An impressive set of [purchasing managers' index] survey readings out of the eurozone has ensured that mainland European markets are outperforming their U.K. counterparts," said Joshua Mahony, a market analyst at IG, in a note.

"Particularly impressive data came from the manufacturing sector which seems to have staged an unlikely comeback, with eurozone, French and German manufacturing PMIs all hitting 2016 highs," he said. Read: Eurozone economy picks up speed in October (Eurozone%20economy%20picks%20up%20speed%20in%20October)

The Stoxx Europe 600 (http://www.marketwatch.com/story/european-stocks-advance-with-spanish-shares-energized-by-political-deal-2016-10-24) was up 0.6%.

The FTSE 100's best performance came from easyJet (EZJ.LN) . Shares rose 2.6% following an upgrade to buy from neutral at UBS, which said the shares this year "have materially de-rated and we think [they] look attractive."

The main concerns heading into 2017 are "around factors the company cannot control namely currency and oil movements as well as industry capacity," said UBS analyst Jarrod Castle in a research note. But easyJet "has both cost and capex levers it can pull".

But Royal Bank of Scotland PLC (RBS.LN) fell 1.4% as Investec cut the bank's rating to sell from hold.

RBS is in discussions with U.S. authorities related to a potential settlement over alleged mis-selling of mortgage-backed securities. But it appears that "RBS now faces a potentially even less favorable environment for conduct resolution," as Hillary Clinton looks set to win the U.S. presidential election on Nov. 8.

"We think this may prove detrimental to RBS' negotiating position (and that of other banks under investigation)," wrote Investec analyst Ian Gordon, adding they have raised its incremental conduct charge forecast to GBP6.4 billion from GBP4.8 billion through the third quarter of 2016 to the fourth quarter of 2018.

The pound was buying $1.2242, compared with $1.2229 late Friday in New York trade.

(END) Dow Jones Newswires

October 24, 2016 05:48 ET (09:48 GMT)

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