STOCKS NEWS EUROPE-National Express up on rail deal report

Shares in British transport operator National Express (NEX.L) rise 11.8 percent on weekend press reports that it has struck a deal with the British government to abandon its east-coast rail franchise.

Investec, which has a "buy" rating on the company, says the news is a "major positive for the company, potentially generating large upgrades and opening the door to refinancing".

National Express, which is not immediately available for comment, runs the east-coast, London to Edinburgh, mainline service, the UK's most expensive franchise, which has been hit by the recession's impact on passenger numbers and revenues.

The broker says it does not expect the Department for Transport to renegotiate other rail franchises, but believes the news is likely to benefit the sector overall on hopes that liabilities on over-aggressive franchise bids will now generally be capped.

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