STOCKS NEWS EUROPE-Buy utilities, sell energy before results-BNP

The European energy sector could be hit during the third-quarter earnings season, while utilities should hold up well, reckons BNP Paribas, and recommends playing the theme via options.

"We are looking for sectors with resilient margins, decent earnings trends and with little exposure to Europe," BNP's derivatives strategists write in a note.

It suggests buying November 2012 puts on the STOXX 600 basic resources sector , noting that "analyst consensus' on the sector is continuing to weaken", while a strong sterling and Chinese growth concerns also weigh.

For the equivalent utilities index it suggests calls, noting the sector's "excellent earnings momentum and the lowest change in margin expectations for 2012". Positioning further backs the trade, with utilities "the most underweight sector in Europe".

Utilities are expected to report a 12.9 percent year-on-year rise in third quarter earnings, with risks skewed to the upside, according to Thomson Reuters Starmine. In contrast, energy profits are forecast to fall by 2.8 percent.

In Europe overall earnings are seen down 1.1 percent. Reuters messaging rm://