STOCKS NEWS EUROPE-UK small caps edge up to beat blue-chips

The FTSE Small Cap index edges up by 0.1 percent in early session trading, beating falls of 0.2 percent on the blue-chip FTSE 100 index and on the FTSE 250 mid-cap index.

The junior-listed FTSE AIM All Share Index retreats by 0.6 percent.

Healthcare company Vectura, whose products deal with breathing problems such as asthma, rises 1.4 percent as analysts welcome the company's planned takeover of German peer Activaero for 130 million euros ($180.76 million).

The acquisition brings a pipeline of late-stage and early-stage assets across a spectrum of indications as well as access to proprietary smart nebuliser-based technology that enables targeting of inhaled drugs into pre-selected areas of the lung," Shore Capital analysts write in a research note, keeping a "buy" rating on Vectura's shares.

However, Gulf Keystone (LSE: GKP.L - news) slumps 26 percent, after the company lowers its output guidance from its Shaikan site in Iraq.

"The numbers are likely to be on the lower end of expectations and have a negative effect on the share price today," Westhouse Securities writes in a research note, keeping a "neutral" rating on Gulf Keystone's shares.

($1 = 0.7192 Euros)

Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net