STOCKS NEWS EUROPE-UK small caps rise 0.7 pct, outstrip FTSE

UK small caps and junior-listed AIM shares rise 0.7 and 0.1 percent, respectively, outperforming the blue chips, which fall by 0.3 percent.

Redhall slumps 17.9 percent, the top AIM-listed faller, after the engineering firm gives a disappointing trading update, with results now expected to miss market expectations.

"The nuclear operation has seen a lower level of activity, with some slower trading also seen at its Engineering (Milan: ENG.MI - news) operation. As a result we reduce our 2013 EPS forecast by 35 percent," finnCap says in a trading note, cutting its target price on the stock.

"This is a disappointing setback for the group, which has been hit by several problems over recent years. The shares are likely to react negatively today on this downbeat news, but we still see longer-term value once near-term issues are resolved," the note adds.

Charles Stanley (LSE: CAY.L - news) , meanwhile, downgrades the stock, to "hold" from a previous "buy" recommendation.

Zanaga Iron Ore gains 11.8 percent after news that the design of the Zanaga project - co-owned with Glencore Xstrata (Other OTC: GLCNF - news) - is to be revised, cutting initial spending on the site.

The announcement highlights "the potential for a more capitally efficient project," according to Liberum, who retain a "buy" rating on the stock.

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