STOCKS NEWS EUROPE-GlaxoSmithKline weak on downgrade

Shares in GlaxoSmithKline (GSK.L) fall 0.8 percent, the biggest FTSE 100 .FTSE faller and heading a weak drugs sector as Jefferies cuts its rating to "hold" from "buy" in a preview of upcoming third-quarter results, due on Oct 28.

"Despite improving near-term earnings from pandemic flu/Relenza windfalls, GlaxoSmithKline still shows low revenue and earnings growth with the underlying business deteriorating into 2010," Jefferies says.

The broker says its "hold" rating takes into account positive near-term catalysts, but also reflects the market catching-up with our view on Advair generics and a recently improved valuation.

Jefferies raises its target for GlaxoSmithKline to 1,350 pence from 1,300 and says its fundamental view of the company has not changed and it still sees it as an attractive holding for investors wishing to shelter from negative macro forces.

Reuters Messaging rm://jon.hopkins.reuters.com@reuters.net