Last checked at 
* Fed, ECB reassurances support sentiment
* M&S hits 1-year high on profit recovery forecast
* Danone slips on Berenberg downgrade
(Adds comments, updates prices throughout)
By Sruthi Shankar and Shreyashi Sanyal
May 26 (Reuters) - European stocks ended flat on Wednesday,
led by bank shares after central bank policymakers pledged to
keep monetary policy loose despite recent signs of an uptick in
inflation.
The pan-European STOXX 600 index was flat, with
bank falls offsetting travel and leisure gains.
Stocks drifted higher earlier, holding near record highs
after U.S. Federal Reserve officials reaffirmed a dovish
monetary policy stance.
Similar comments from European Central Bank policymakers,
including that it may be too early to discuss tapering of
emergency bond purchases, helped equity markets in the region
stabilize.
But banking stocks came under pressure as a result.
"Investors appear to be fairly content with the outlook for
policy, and inflation concerns have certainly receded for the
time being," said Chris Beauchamp, Chief Market Analyst at IG.
"This will mean that further gains in bank stocks based off
hopes of rising yields will be cancelled out for the time being,
resulting in banks joining in the list of stocks that have
struggled to find a catalyst to keep rising," he added.
The STOXX 600 hit a record high on Tuesday, after rising
almost 12% this year, helped by strong earnings and optimism
over re-opening of economies as COVID-19 vaccinations pick up.
"We've been very risk on for the start of 2021, and we've
taken quite a bit of cyclicality off our asset allocation simply
because we're missing the next big catalyst on the macro side,"
said Max Kettner, multi-asset strategist at HSBC Global
Research.
European stocks are set to hold around or inch just above
current record levels, with a Reuters poll of strategists
predicting the STOXX 600 would reach 451 points by year end,
just 1.3% above Monday's close.
British retailer Marks & Spencer jumped 8.5% to a
one-year high after it said it had traded well in the early
weeks of the 2021-22 and that earnings would recover after an
88% slump in full-year profit.
French food firm Danone slipped 1.8% after
Berenberg downgraded the stock to "sell", citing the hard-to-fix
low-growth nature of most of its businesses.
Spire Healthcare jumped 26.9% after Australia's
Ramsay Health Care said it would buy the British
hospital operator for 1 billion pounds ($1.42 billion).
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Arun Koyyur and Alexander Smith)
