STOCKS NEWS EUROPE-HSBC ups Europe to "overweight" in Q4 review

HSBC analysts upgrade European equities to "overweight" from "neutral" forthe first time in three years as part of a fourth-quarter strategy outlook inwhich the bank flags financials and utilities as key sector picks and focuses on'value' as an investment theme.

"With valuations low (though not as ultra-cheap as earlier in the year) andinvestors in only the early stages of taking on more risk (though sentimentimproved sharply in September), we think that equity markets can rise moderatelyfrom here," they write in a note.

"Value is the key theme across our regional, country and sectorrecommendations. We expect value opportunities to be the biggest beneficiariesfrom the easing of global financial conditions that we believe will materialiseas a result of central bank actions."

The bank's strategists say they have not taken a position on the strength ofthe global economy given heightened uncertainty about a move in eitherdirection, and are "neutral" on both cyclicals and defensives. "Sectorperformance has been mixed so far this year, and we expect this to continue."

HSBC ups financials to "overweight" from "neutral", as it expects them to bethe biggest winner from any European stock market gain, and upgrades utilitiesto "overweight" from "underweight".

Reuters messaging rm://simon.jessop.thomsonreuters.com@reuters.net