STOCKS NEWS EUROPE-Citi upgrades financials to overweight

Citigroup upgrades global financials to "overweight", saying in a research note the sector looks cheap.

"There are signs that earnings momentum is stabilising," Citigroup says, adding that financials are now at a stage in the cycle where a positive stance is becoming more appropriate.

It is also "overweight" telecoms and energy, and "underweight" information technology, industrials and utilities.

"March represented the lows for share prices in this cycle. While it seems likely that markets need to take a pause for breath after such a strong rebound, the time for overtly defensive recommendations has now passed," Citigroup says.

Regionally, Citigroup favours "the cheap European markets over the more expensive U.S." and it also prefers emerging over developed markets.

"We can see signs that the global economy is stabilising and the earnings downgrade cycle is approaching an end. While some consolidation in share prices is welcome in the shorter term, emerging evidence of recovery (however muted) should help global equities to make further gains in the second half of 2009," it says.

Reuters Messaging rm://peter.starck.reuters.com@reuters.net