STOCKS NEWS EUROPE-Saxo backs picking small caps for big returns

Saxo recommends targeting small cap stocks which stand to outperform largercounterparts in a fourth quarter set to be marked by economic uncertainty.

"We foresee subdued economic growth going forward as the financialrepression continues," Saxo analysts write in a note.

"In that environment small niche companies with comparative advantages willdo well compared to larger companies."

Saxo still believes that despite an impressive equity rally in the lastquarter, the upside is limited.

"Observations since our last outlook have confirmed that a correction instocks could soon come," the note adds.

Saxo's top ten small cap stocks include British holding company KentzCorporation , Germany based space technology company OHB andSwedish firms Betsson AB and Axis

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