STOCKS NEWS EUROPE-UK small caps lag market as Premier Foods hit

The FTSE small cap index is up 0.1 percent, lagging increases of between 0.2 percent and 0.4 percent for junior-listed AIM shares, mid-caps and blue chips.

Premier Foods (LSE: PFD.L - news) falls 6.7 percent to the bottom of the FTSE small caps as the Sunday Times reports the foods firm is poised to launch a 300 million pound ($490.65 million) rights issue as part of a financial package to tackle debts and fight off Apollo, a Wall Street fund.

A rights issue of this size, equal to the company's current market capitalisation, would be likely to have a dilutive effect on the stock.

Analysts at Shore Capital (Other OTC: SHOCF - news) , however, highlight its long-term benefits.

"With a more conventional balance sheet, incorporating stronger solvency ratios, the highly profitable key brands and self-improvement in tow, Premier can press on with its stock, in our view, at a higher rating," the analysts write in a note.

AIM-listed oil shale exploration and development company TomCo Energy (LSE: TOM.L - news) rises 22 percent as its partner and fellow developer in Utah, Red Leaf Resources, secures a groundwater discharge permit, for which TomCo is also set to apply.

"We...see it as a strong endorsement," TomCo's CEO Paul Rankine says in a statement. "TomCo intends to closely follow Red Leaf's precedent, with...applications expected to be submitted in early 2014."

Reuters messaging rm://francesco.canepa.thomsonreuters.com@reuters.net

($1 = 0.6114 British pounds)