STOCKS NEWS EUROPE-SVM UK Active Fund likes oils, mining, telcos

STOCKS NEWS Reuters Results diary

Stocks on the move [HOT-RTRS] Real-time Equity News [E] [WEU/EQUITY]

09:44GMT 22July2008-SVM UK Active Fund likes oils, mining, telecoms

-------------------------------------------------------------------

SVM UK Active Fund says it remains defensive, with oil and gas, utilities, telecoms and mining as its top sector picks, and keeps short positions on RSA Insurance (RSA.L), HBOS HBOS.L, Investec (INVP.L) and Uniq (UNUNI.L)

"SVM believes that the banking bubble will take some time to unwind both in the U.S. and Europe. Writeoffs may accelerate in the fourth quarter, and continue into next year. Rebuilding tier I capital will prove tough for many smaller banks," the fund says in a note.

"The future earnings model for banks may only justify a valuation in line with book value, giving some further potential downside even for those with better lending practices."

The fund says its largest long investments are BG Group (BG.L), Tullow Oil (TLW.L), Royal Dutch Shell (RDSa.L) and British Energy BGY.L. It also has a position on AstraZeneca (AZN.L).

It adds the slowdown in the UK housing market will lead to a sharp fall in consumer confidence and it expects "weak trading to combine with margin pressures and balance sheet problems to trigger further share price falls in many UK consumer businesses, and the fund will maintain a defensive strategy by limiting exposure."