STOCKS NEWS EUROPE-KPN outperforms on Deutsche upgrade

Shares in Dutch telecoms group KPN are the top FTSEurofirst 300 gainer, with traders attributing its rise to an upgrade to "buy" from"hold" by Deutsche Bank in a European telecoms review, while Britain's Vodafone slips after Deutsche cuts its rating to "hold". KPN is up 2 percent, outperforming a 0.3 percent fall by the FTSEurofirst300 index. Deutsche Bank analysts say one of the main reasons for their upgrade on KPNis that they expect that it will not need to raise cash for investments via arights issue as the Dutch group's new business plan - due next month - shouldlimit any credit downgrade and let it still tap the debt markets for cash. "We expect clearer action post the business plan update and believe a onenotch downgrade to the lowest tier of investment grade is likely. This outcome,we believe, would leave KPN still enjoying good access to the debt markets onacceptable terms," Deutsche analysts write in a research note. "As such, we believe a rights issue can be avoided," they adds. Vodafone falls 1.0 percent after Deutsche cuts it to "hold" from "buy" withanalysts at the bank forecasting a slowdown in growth at the British company. "We forecast growth deterioration through calendar 2013 with the outlook forfinancial full-year 2014 set to confirm declining free cash flow (FCF), nofurther dividend per share (DPS) growth and a scaled down buyback to avoidincreased leverage," Deutsche writes in a note. SVM Asset Management fund manager Neil Veitch says his portfolio is"underweight" on telecoms stocks. "We're sceptical about the companies' ability to monetise theirinvestments," he says. Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net