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

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

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

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

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

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

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

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

Keywords: MARKETS EUROPE STOCKSNEWS