STOCKS NEWS EUROPE-HSBC up as BofA Merrill Lynch upgrade

Shares in HSBC (HSBA.L) rise 0.7 percent, outpacing falls in banking stocks and the FTSE 100 index .FTSE as the lender benefits from a recommendation upgrade to "buy" from "neutral" by Bank of America Merrill Lynch.

The broker says the upgrade is premised on a sustained period of earnings revisions expectations for HSBC, a balance sheet which is among the most robust for international banks, and the lender's attractive risk/reward profile.

"We believe that HSBC is likely to experience a further sustained period of earnings upgrades as the market gains confidence in the global economic outlook and plays catch up with the improvements in credit costs and revenues," the broker's analysts in Hong Kong write in a note to clients.

The broker adopts a less pessimistic view on the outlook for loans loss provisions, especially in the U.S., and draws comfort from HSBC's comments that it has not seen any further deterioration in asset quality in the Asian, Latin American and European loan books.

BofA Merrill Lynch also raises its target price for the global bank to HK$118 from HK$97.50.

Reuters Messaging rm://harpreet.bhal.reuters.com@reuters.net