LONDON (ShareCast) - British housebuilders are unlikely to take a major hit from a rise in interest rates, US broker JP Morgan Cazenove said on Tuesday.

"Given we expect a rate hike to be associated with improving economic conditions, we expect limited impact on market conditions".

Large UK property stocks, which are already trading at demanding valuations, could be set for a temporary de-rating on the back of "more challenging macro conditions", according to analysts at Deutsche Bank.

The bank pointed out that property majors in the UK and across Continental Europe are trading at valuations "that are nearly as demanding as those at the peak of the credit boom". Among the UK-listed names, it sees the greatest downside to its price targets in Segro and Capital & Counties.

Credit Suisse has maintained its 'neutral' stance on high-end fashion group Burberry, saying that recent currency movements are impacting it more than its luxury peers.

"Since we do not see Burberry's superior organic sales growth translating into superior earnings growth, we see a 'neutral' rating as appropriate."

Investec has upgraded its rating for Costa and Premier Inn owner Whitbread from 'sell' to 'hold' after a strong first-quarter update from the leisure group that beat forecasts.

"A premium rating and key risks around incremental hotel returns dilution preclude a more positive stance, although the strength of trading across its UK brands leads us to remove Whitbread from our 'sell' list."

Exchange operator London Stock Exchange (LSE) remains Morgan Stanley's preferred play across the European diversified financial sector.

With an "undemanding" valuation compared with others in the industry, the bank has repeated its 'overweight' recommendation.

JP Morgan Cazenove has downgraded Mitchells & Butlers (M&B) to 'neutral' from 'overweight' following the British pub group's £266m acquisition of 173 pubs from rival Orchid.

JP Morgan said it believed the acquisition of the Orchid pubs made it unlikely that M&B would resume paying a dividend in either the 2013/14 or 2014/15 financial years.

BC

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