STOCKS NEWS EUROPE-Alcatel drops after UBS downgrade

Shares in French telecom equipment gear maker Alcatel drop 2.5 percent, the biggest loser on France's blue-chip CAC 40 index , after UBS downgrades the stock to 'Sell' from 'Neutral'.

"We see top line risks in Q3 reflecting weaker fixed line spending in Europe and lack of recovery in China. We expect losses to be wider than consensus for Q3," UBS analysts write in a note.

"Our recent conversations suggest Alcatel is likely to once again sell assets to pay back bond holders to the detriment of equity holders," they add.

The company's shares are down 30 percent since the start of the year, valuing Alcatel at 1.9 billion euros ($2.44 billion).

Reuters messaging rm://