UPDATE 1-RESEARCH ALERT-KBW cuts 3 European banks

Jan 7 (Reuters) - Keefe, Bruyette & Woods (KBW) downgraded
three European banks, and said distressed funding markets,
declining asset quality and capital concerns will weigh on the
European banking sector in the near term. [ID:nWNAB7316]

"We therefore maintain our neutral stance on the sector and
await an improvement in key indicators that might act as a
positive catalyst for bank share prices," the brokerage said in
a note to clients.

But the brokerage said valuation is the only supporting
factor for the sector, which is trading at multi-decade lows on
nearly all valuation metrics.

KBW said "investors should steer clear of bank stocks
perceived as super defensive" such as HSBC (HSBA.L),
Handelsbanken (SHBa.ST) and Sabadell (SABE.MC), and should
instead focus on "attractively valued, relatively defensive
plays" such as BNP Paribas (BNPP.PA), Mediobanca (MDBI.MI), UBI
Banca (UBI.MI), and Alpha Bank (ACBr.AT).

Following are the price target changes made by KBW on the
banks:
Company Price target

Current Prior
Standard Chartered (STAN.L) 1250p 950p
Intesa Sanpaolo (ISP.MI) 3.8 euros 3 euros
Dexia (DEXI.BR) 2.5 euros 2.1 euros
Mediobanca (MDBI.MI) 12.5 euros 10.7 euros
UBI Banca (UBI.MI) 17.5 euros 15.5 euros
Deutsche Bank (DBKGn.DE) 40 euros 44 euros
Credit Agricole (CAGR.PA) 11.7 euros 13.0 euros
SEB (SEBa.ST) 81Sek 126Sek
KBC Group (KBC.BR) 30.6 euros 45.0 euros
Danske Bank (DANSKE.CO) 87Dkk 119Dkk
Nordea (NDA1V.HE) 6.8 euros 9.3 euros
Swedbank (SWEDa.ST) 80 Sek 61 Sek
Handelsbanken (SHBa.ST) 141Sek 179Sek
Anglo Irish ANGL.I 0.26 euros 0.70 euros
Barclays (BARC.L) 230p 285p
Banco Popolare (BAPO.MI) 9 euros 10.8 euros
Bank of Cyprus (BOCr.AT) 4.2 euros 5.1 euros
(Reporting by Antonita Madonna Devotta in Bangalore; Editing
by Pratish Narayanan)