European Stocks to Watch: Alitalia

Shares in Alitalia gained 2.1% Friday following reports the Italian airline is considering a potential bid from Air France.

The board at Air France discussed the option of buying a stake in Alitalia on Thursday, Italian news agency Adnkronos said, citing a source familiar with the situation.

The speculation comes after Russian Airline Aeroflot withdrew its bid for the Italian national carrier Wednesday.

Segro (Down 3.6%) HSBC downgraded Segro to "underweight" from "neutral," predicting a slowdown in the real estate sector, according to Sharecast.com.

Berkeley (Up 2%) U.K. homebuilder Berkeley Group reported a 14% jump in annual profit before tax, bolstered by a continued strong market in the company's core regions of London and the Southeast.

Valeo (Down 2.2%) The French car parts maker failed to agree a takeover price with private equity firm PAI, according to a report in the Financial Times.