STOCKS NEWS EUROPE-Citi bullish on U.S. equities, bearish on Europe

Citi upgrades U.S. equities to "overweight" despite a slowing world economy with risks to the downside, while avoiding Japanese and euro zone equities on profit concerns.

"The combination of strong earnings per share (EPS) momentum and a very aggressive central bank are reasons why we upgrade the US to overweight from neutral," analysts say in a note

The upgrade of the U.S. comes at the expense of Japan, which is downgraded from "neutral" to "underweight", with profit recovery since the earthquake in 2011 coming in below the bank's expectations.

The euro zone is maintained as "underweight".

"The economic recession in the euro zone is only part way through and our economists don't forecast growth to return for some time yet. This should continue to be a drag on EPS for some time to come," the investment bank says.

Within Europe, the analysts prefer pharamceuticals and media, while avoiding euro zone construction and retailing in the euro zone, and like the United Kingdom, seeing a shorter lived recession there than on the continent.

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