* EU exec approves Lufthansa's purchase of Brussels Airlines
* Lufthansa says strikes deal to buy Bishop's BMI stake
* Moody's downgrades outlook on Lufthansa to 'negative'
* Analysts sceptical on recovery
* Shares down 2.7 percent, blue-chip market off 3 percent
(Adds Moody's downgrade, analyst comments)
By Foo Yun Chee and Maria Sheahan
BRUSSELS/FRANKFURT, June 22 (Reuters) - Progress by Deutsche Lufthansa towards sealing acquisitions drew scepticism on Monday about whether consolidation will help the company boost its earnings amid a weak economic environment.
The airline obtained permission from EU antitrust authorities to buy Brussels Airlines in a deal worth up to 250 million euros ($347 million) after it agreed to let rivals fly on some of its routes.
The German flag carrier also struck a deal with Sir Michael Bishop to acquire his stake of 50 percent plus one share in BMI, boosting its stake in the carrier to 80 percent. As part of the deal, Bishop will receive 223 million pounds ($367.4 million).
"The BMI stake increase is a disaster from our point of view because BMI is without any added value for Lufthansa and the total consideration is higher than expected by us," said DZ Bank analyst Robert Czerwensky.
He said a break-up of the company was the only option for unloading the loss-making British carrier. Lufthansa will publish further details of plans for BMI on June 25, he said.
Lufthansa said earlier this year it was considering various options for BMI, which controls 11 percent of lucrative take-off and landing slots at Britain's Heathrow airport. Options ranged from continuing the carrier's operations to selling the company.
At the same time, Lufthansa is still in talks to buy the remaining 20 percent of BMI from Scandinavian airline SAS, according to a spokesman for SAS.
FINANCIAL CHALLENGES
BMI has faced increasing financial challenges that have been exacerbated by the sharp rise in fuel prices in the past year and the ongoing global economic crisis, Lufthansa said.
Airlines around the world are struggling to cope with a drop in demand for air travel amid the global economic crisis. The International Air Transport Association has forecast that the world's airlines are likely to lose $9 billion this year.
"We have repeatedly highlighted that we see no indication yet for an improved newsflow in the industry," Sal. Oppenheim analyst Hartmut Moers said.
Lufthansa warned on Friday it would not be able to post an operating profit as planned this year without further cost cuts given difficult markets.
Credit rating agency Moody's downgraded its outlook for Lufthansa's debt to 'negative' from 'stable', saying it expected rising fuel costs to slow a recovery in earnings.
"Should market conditions show no signs of improvement in coming quarters, such that metrics continue to deteriorate and appear likely to remain outside our guidance for the rating into 2010, this would likely be negative for the rating," Moody's said in a statement.
Lufthansa shares fell 2.7 percent to 8.55 euros,while the German blue-chip index fell 3 percent.
"The toxic mixture of Lufthansa's recent profit warning, negative consolidation effects and substantial post-merger integration risks underpins our negative view: We recommend selling the stock immediately," DZ Bank's Czerwensky said.
Lufthansa is still awaiting a decision by the EU on another acquisition. It has offered concessions to get approval of its proposed buy of loss-making Austrian Airlines, with the deadline for that review set for July 1.
(Additional reporting by Veronica Ek; editing by John Stonestreet and David Cowell)