Credit Suisse strategists maintain a "small underweight" position on European banking shares while cutting their stance on European insurers to "benchmark" from "overweight", citing risks to the sectors from the euro zone debt crisis, amid other factors.
They say European banks should underperform while the euro depreciates as a result of the European sovereign debt crisis, and adds that their loan growth remains negative.
Unlike rival UBS, which on Tuesday cut its rating on UK banks to "neutral" from "buy", Credit Suisse keeps a positive view on UK banks and says its analysts are most cautious over the Italian bank sector.
The Credit Suisse team adds that the main reasons for its downgrade on the European insurance sector are that it feels the sector is "overbought" and that insurers could take a hit from any rise in sovereign credit default swaps as a result of Europe's sovereign debt problems.
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Keywords: MARKETS EUROPE STOCKSNEWS