Automakers Daimler, Volkswagen downgraded at UBS By Sarah Turner, MarketWatch LONDON (MarketWatch) -- European stocks edged lower on Friday, as losses for BP and autos worked to offset gains for banks ahead of this weekend's G-20 summit as reports indicated rules at a global and U.S. level won't be as tough as initially drafted. The Stoxx Europe 600 index (ST:SXXP 248.56, -1.22, -0.49%) declined 0.4% to 248.71. The Stoxx 600 index ended with a 1.8% drop on Thursday extending losses over three days to 3.3% as investors fretted about this week's poor U.S. economic data and ongoing sovereign debt issues in Europe. However, banks took backs some losses on Friday, with Societe Generale (FR:GLE 35.72, +0.61, +1.74%) shares up 2% and HSBC Holdings (UK:HSBA 647.30, +10.20, +1.60%) (HBC 47.88, -0.66, -1.36%) up 1.7%.. The G-20 meeting takes place this weekend in Canada and bank regulation is likely to be near the top of the agenda. The Financial Times reported Friday that the Basel Committee of banking regulators will pare back some of its planned rules to force banks to set aside billions of dollars of extra capital. Meanwhile, U.S. lawmakers are putting the finishing touches on their financial reform legislation, with reports saying that banks will be able to retain most of their derivatives operations. On the regional level, the U.K. FTSE 100 index (UK:UKX 5,077, -22.77, -0.45%) declined 0.3% to 5,086.85, the German DAX index (DX:DAX 6,077, -38.54, -0.63%) lost 0.5% to 6,084.86 and the French CAC-40 index (FR:PX1 3,533, -22.17, -0.62%) declined 0.4% to 3,540.56. U.S. stock futures were pointing to small losses on Wall Street, with Dow Jones Industrial Average futures down 15 points. Asian shares were lower. Oil giant BP (UK:BP. 303.00, -22.25, -6.84%) (BP 28.74, -0.93, -3.13%) shares fell 6.9% to 303 pence bringing losses since April 20, when the Deepwater Horizon rig exploded to around 53%. "A heavy inversion of both credit yield and equity volatility suggests the market is concerned about a near-term credit event around BP," said Nomura. "We think this perception of near-term credit risk is highly damaging for BP, likely leading to constraints around counterparty trading, the attractive roll of drawn commercial paper and the ability to dispose of assets at attractive prices. Therefore, we see pressure growing on the company to assure sufficient funding to cap the well and meet fat-tail scenarios around near-term expenses," they said. Automakers were also lower on Friday, with Daimler (DE:DAI 41.99, -1.67, -3.81%) shares down 2.6% and Volkswagen (DE:VOW3 75.35, -1.93, -2.50%) shares down 2.3% after both firms were downgraded to neutral from buy at UBS on Friday. "VW's valuation doesn't look expensive, but we are concerned about the group's ability to meet ambitious consensus earnings estimates in what is shaping up as low growth in mature markets and increasing risk of pull-backs in China and Brazil," UBS said. The broker said it downgraded German car maker Daimler because of its valuation, since the stock is now pricing a return of Mercedes-Benz to historic peak margins and an improved performance in the trucks unit Still, Porsche (DE:PAH3 34.69, -0.42, -1.20%) shares lost 0.5% after a report in the Financial Times that Volkswagen (DE:VOW3 75.35, -1.93, -2.50%) plans to reshuffle managers at the sports car firm it half owns.

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