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* STOXX 600, DAX and CAC all fall
* But UK's FTSE 100 rises as sterling loses more ground
* Edenred falls after UBS downgrade
By Sudip Kar-Gupta
LONDON, Oct 7 (Reuters) - Continental European stock marketsfell on Friday, with vouchers company Edenred andairline easyJet among the worst performers, although anew slump in sterling propped up Britain's FTSE 100.
The pan-European STOXX 600 index was down by 0.5percent and Germany's DAX and France's CAC bothretreated by a similar amount. The STOXX 600 has fallen byaround 7 percent since the start of 2016.
"European stocks look utterly uninteresting to me at themoment. Corporate profits are weak and the economy remains weakas well," said Andreas Clenow, chief investment officer atSwiss-based ACIES Asset Management.
Edenred fell 4.7 percent after UBS cut its rating on thestock to "neutral" from "buy". EasyJet fell 3.3 percent afterbroker downgrades following its profit warning on Thursday.
However, the FTSE 100 managed to gain 0.5 percent, since theslump in sterling should benefit exporters and help the index'sinternational companies .
Sterling slid on new concern that British Prime MinisterTheresa May's government will back a "hard Brexit" where Britainquits the European Union's single market in favour of imposingcontrols on immigration.
That could hinder inward and outward trade and constrict theforeign investment needed to fund Britain's current accountdeficit, 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-basedfund management and consultancy firm Prime Partners.
Deutsche Bank, whose shares rose on Friday butremain near record lows, is fighting a fine of up to $14 billionfrom the U.S. Department of Justice over the alleged mis-sellingof mortgage backed securities.
Investors are also concerned about bad debts in the Italianbanking system.
"Europe seems to offer value, but concerns over thefinancial system and political uncertainties - particularly withthe French and German elections next year - call for caution,"said Savary, who has reduced his European equity allocation. (Additional reporting by Atul Prakash, editing by Larry King)