STOCKS NEWS EUROPE-Hammerson weak on capital raising talk

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14:05GMT 15Jan2009-Hammerson weak on capital raising talk

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Shares in property firm Hammerson (HMSO.L) shed 3.8 percent, tracking a weak sector and market trend as capital raising rumours persist and after credit rating firm Moody's cut its outlook for the UK group on Wednesday.

Moody's changed the outlook to negative from stable for Hammerson's Baa2 issuer rated debt, says JP Morgan in its latest 'Property Ticker' note.

The broker says its "neutral" view on Hammerson does not change because of Moody's downgrade but says the clear issue remains the property firm's bond covenants, which could be breached if the company does not take some action.

However, JP Morgan believes Hammerson is aware of this and is considering its options, like for example disposing of its largest asset at Bishops Square, valued at 560 million pounds at June 2008, and/or undertaking an equity issue.

The broker says it has currently factored in to its valuation model a 500 million pound disposal and 100 million pound equity issue by Hammerson.