STOCKS NEWS EUROPE-HSBC sees Europe stocks rising, upbeat on Spain

HSBC equity strategists expect European equities to rise further, boosted by central banks' quantitative easing (QE) programmes and attractive valuations, and they have an "overweight" position on Spanish equities, despite concerns over Spain's sovereign debt crisis.

"We expect European equities to rise, boosted by QE and attractive valuations. Earnings and dividend forecasts are too pessimistic, in our view," they write in a strategy note.

Many analysts expect Spain to seek a full sovereign bailout package in the coming weeks. Expectations that the process is already underway has lifted Spain's IBEX benchmark equity index this week.

Investors see a bailout request as a key hurdle to cross before activating the European Central Bank's government bond-buying plan, which is aimed at lowering the borrowing costs of debt-ridden European countries.

"Among countries, we highlight our 'overweight' for Spain. Valuations are attractive, but this is really a judgment that Spain is likely to enter an EU programme by the end of October and benefit from ECB bond-buying," write the HSBC strategists.

Although Spain's IBEX stock market is still down 8 percent since the start of 2012, it has risen some 30 percent from lows of around 5,994 points at the start of June.

According to Thomson Reuters Starmine data, the pan-European STOXX 600 index

index trades at a 2013 price-to-earnings (P/E) ratio of 10.6, versus 12.6 for Wall Street's S&P 500 index . The Spanish stock market trades at a P/E of 10.2 times.

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