June 11 (Bloomberg) -- U.K. stocks fell, led by Next Plc after Merrill Lynch & Co. downgraded the shares, saying the retailer would be hurt by increased competition. Cable & Wireless Plc declined as Morgan Stanley cut its share-price forecast.

The benchmark FTSE 100 Index lost 13.3, or 0.3 percent, to 4472.80 as of 9:14 a.m. in London. The FTSE All-Share Index shed 6.05, or 0.3 percent, to 2225.27, as about eight stocks declined for every five that gained.

Next, Britain's third-largest clothing retailer, dropped 24 pence, or 1.7 percent, to 1,406 after Merrill Lynch cut its recommendation to ``neutral'' from ``buy''. Analyst Katharine Wynne reduced Next's stock-price estimate 5 percent to 1,520 pence.

Cable & Wireless, the U.K.'s second-biggest phone company, slipped 1.25 pence, or 1 percent, to 128.75. Morgan Stanley cut its share forecast 4.3 percent to 110 pence, citing lower-than- expected profitability at Cable & Wireless's Caribbean unit and rising costs. The brokerage has an ``underweight'' recommendation on the company.

The FTSE 350 Insurance Index was the only industry group out of 34 that rose.

The following stocks are making gains or losses today. Stock symbols are in parentheses after company names.

CES Software Plc (CES LN), which makes Internet gambling software, climbed 13 pence, or 13 percent, to 111, the highest since March 5. The company's joint venture, European Betting Exchange Plc, hired Canaccord Capital Europe and Erste Bank to sell shares to money managers in a private placement.

European Betting, which CES co-owns with Austria's Betandwin.com Interactive Entertainment AG, intends to start trading on London's Alternative Investment Market, CES said in a Regulatory News Service statement.

Close Brothers Group Plc (CBG LN), a London-based investment bank, slid 26.5 pence, or 3.3 percent, to 775 after its largest shareholder, Caledonia Investments Plc, said it sold 7.4 million shares, or 5.1 percent of the company, at 775 pence a share.

FirstGroup Plc (FGP LN), the U.K.'s second-largest bus and rail company, gained 5.5 pence, or 2 percent, to 280 after it was named as the preferred bidder for the seven-year Scottish Passenger Rail franchise by the Strategic Rail Authority.

National Express Plc (NEX LN), FirstGroup's larger rival, which currently holds the franchise and lost the bidding for the new contract, slipped 4 pence, or 0.6 percent, to 713.

ITM Power Plc (ITM LN), which develops fuel cells, jumped 4.5 pence, or 9 percent, to 54.5 on its first day of trading on London's Alternative Investment Market. The company said it raised 10 million pounds ($18.2 million) by selling shares to money managers.

Michael Page International Plc (MPI LN), a recruitment business whose customers include Merrill Lynch, added 3 pence, or 1.7 percent, to 180.75 after Morgan Stanley raised the shares to ``overweight'' from``equal-weight'', saying the company will benefit as its clients create more jobs. The brokerage lifted its stock-price estimate 7.7 percent to 210 pence.

To contact the reporter on this story: Kotaro Miyata in London at kmiyata2@bloomberg.net.

Last Updated: June 11, 2004 05:44 EDT