STOCKS NEWS EUROPE-UK small caps rise, outstrip FTSE

The FTSE small cap index rises 0.3 percent, outstripping both a 0.2 percent drop for junior-listed AIM shares, and the blue chips, which trade flat.

Mothercare (Other OTC: MHCRF - news) gains 4.8 percent in volume three times its 90 day average after a report in the Sunday Times that Britain's biggest supermarket Tesco (Xetra: TCO.DE - news) had considered bidding for the mother and baby products retailer, adding that a recent share price could rekindle its interest in the firm.

"We are surprised by this story as Tesco has spent much time recently talking about sweating its existing assets, capital discipline and stronger solvency ratios. Spending (around) 300-350 million pounds on Mothercare assuming a c30 percent premium to its current market capitalisation of 250 million pounds ($411.11 million) would, to our minds, not be wholly consistent with such a plan," Shore Capital says in a note.

"(However), it is difficult to dismiss speculation outright until confirmed or otherwise," it says, adding that the news would boost Mothercare's share price.

Mwana Africa (Other OTC: MWNAF - news) drops 9 percent after the AIM-listed miner reports a drop in gold production, which was hit by engineering downtime and shutdowns, prompting Peel Hunt to cut its earnings estimate and target price for the stock.

($1 = 0.6081 British pounds)

Reuters messaging rm://alistair.smout.thomsonreuters.com@reuters.net