Citigroup cuts 2008 target for FTSE 100

(Reuters) - Citigroup cut its year-end target for FTSE 100 Index .FTSE and DJ Stoxx 600 Index .STOXX, noting European equities were 20 percent lower than summer 2007 highs and that this is "bear market territory."

It lowered its 2008 target for DJ Stoxx 600 Index to 340 from 415 and for FTSE 100 Index to 6,200 from 7,000.

"Until negative fundamental trends are less pervasive, a call for a sustained bull market seems premature... We expect a choppy ride in equity markets through the rest of 2008," Citigroup wrote in a research note.

It is too soon to declare victory against the threat of financial distress, liquidity crisis, credit crunch, macro disappointment and systemic risk, the brokerage added.

In addition, the earnings downgrade cycle is in its infancy, the brokerage said. "Weak developed world macro data and earnings downgrades" would likely prolong the bad news cycle, Citigroup added.

"We look to aggressive (and possibly co-ordinated) policy action, low/negative real rates, relative resilience in emerging markets and reasonable equity valuations to provide resistance to a fall in share prices materially below 2008 lows," the brokerage said.

Volatility will likely remain high, but investors will be rewarded for being "nimble" or genuinely long-term, it added.

(Reporting by Tenzin Pema in Bangalore; Editing by Bernard Orr, Himani Sarkar)