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LONDON, Oct 18 (Reuters) - Bank of America-Merrill Lynch’s European equity strategy team upgraded regional banks to “overweight” on the back of light positioning, progress on restructuring in Italy and a turn in bond yields globally.
Longer term earnings power remains an issues, BofA-ML said in a note to clients, but earnings momentum was getting “less bad” and higher-quality large banks offered attractive dividend yields with emerging market exposure an added plus.
Worries about developed market growth and crowded trades spurred a downgrade to “neutral” on industrials as valuations now appear rich, the note said.
Reporting by Vikram Subhedar; Editing by Atul Prakash