* FTSEurofirst 300 up 0.1 pct, Euro STOXX 50 slips 0.2 pct
* S&P downgrade to Spain pegs back European equities
* Gains at Carrefour, Burberry push some indexes into positive territory
By Sudip Kar-Gupta
LONDON, Oct 11 (Reuters) - A rating cut that added to concerns over Spain pegged back European equities on Thursday, although gains in major retail and fashion stocks enabled some key indexes to edge into positive territory.
The euro zone Euro STOXX 50 index fell 0.2 percent to 2,452.19 points, but the broader pan-European FTSEurofirst 300 index rose 0.1 percent to 1,091.41 points.
A creeping return of fears over Europe's sovereign debt crisis were highlighted by the Standard & Poor's downgrade late on Wednesday, which adds to pressure on Spain to seek a sovereign bailout.
The downgrade pushed up Spanish bond yields as well as those of Italy, also under pressure from the region's economic problems, and Spain's IBEX stock market fell 0.8 percent.
"We are still avoiding southern European equities, we're sticking more to core European equity markets such as the UK," said Cyrille Urfer, head of asset allocation at Swiss bank Gonet.
Some of those core European markets - such as Britain's FTSE
and France's CAC-40 - rose on Thursday following gains on stocks such as UK luxury clothing retailer Burberry
and French supermarket retailer Carrefour .
Burberry, whose shares slumped last month after a profit warning, rose 7.7 percent as it reported a rise in first-half underlying revenues.
Carrefour rose 4.5 percent after reporting that sales in its core French market were improving, while its Brazil business remained strong.
The underlying economic uncertainty has meant that many investors have favoured "defensive" stocks - companies seen as the most resilient to the economic slowdown and with a large global reach - to more "risky" sectors such as banks or miners.
"We still like the defensives, the companies with the large franchises," said Urfer.
Equity markets have rallied since July, when world monetary authorities including the European Central Bank (ECB) pledged new measures to fight off the effects of the euro zone crisis and global economic slowdown.
However, markets have fallen back from peaks reached in mid-September due to uncertainty over the timing of any eventual Spanish bailout request, as well as worries that the central banks' actions have failed to stem the economic slowdown.
"We're continuing to see weaker economic numbers and the euro zone issues are still there. The euro zone will dominate the month of October," said TJ Markets' head of trading Manoj Ladwa.
Adrian Slack, head of equities at Bastion Capital, said he still expected European equity markets to remain under pressure for this month.
Slack said the Euro STOXX 50 could fall down to around 2,396 points, while Germany's DAX could go down to the 7,151 point level.
(Reporting by Sudip Kar-Gupta; editing by Patrick Graham)
Keywords: MARKETS EUROPE STOCKS/OPEN