BUZZ-European stocks: the "reflation" trade gains traction

** Banks, resources and energy names most likely stocks to benefits from reflationary signals continuing to emerge

** At least three brokers talking up trade in strategy notes published on Monday, pointing to rising bond yields, higher inflation breakevens and rallying commodities as indicators

** JPM says moves overweight banks to benefit from rise in bond yields, also overweight energy v underweight utilities and staples

** Adds falling dollar also reflationary as it supports commodity prices

** Morgan Stanley (Xetra: 885836 - news) says overweight energy best way to capture upside from reflation

** Aviate Global tipping banks and construction, stocks in its reflation basket include SocGen (Paris: FR0000130809 - news) , Caixabank (Other OTC: CAIXY - news) and ING ; as well as ThyssenKrupp (Xetra: 750000 - news) , ArcelorMittal (Other OTC: AMSYF - news) and CRH (NYSE: CRH - news)

** Banks and resources stocks outperformed benchmark in reflationary environment in 2009, as well as during US taper tantrum in mid-2013. Chart: http://link.reuters.com/bef74w

** Banks bouncing off historically low relative valuations with positive money supply also supportive. Chart: http://link.reuters.com/qab44w

** Contrarian view: oil bounce exaggerating reflation theme in the same way collapsing prices exaggerated deflation fears

** More on European cyclicals' outperformance (RM (LSE: RM.L - news) : alasdair.pal.thomsonreuters.com@reuters.net)