BUZZ-UBS Wealth Management downgrades French equities, predicts 40% chance of Le Pen win

** UBS Wealth Management downgrades French equities to neutral in European country strategy, previously fund manager's most preferred in the Eurozone, citing election uncertainty

** Fund manager gives far-right contender Marine Le Pen (Other OTC: PENC - news) 40% chance of victory in May presidential election, says Monday's television debate "highlights how uncertain the election outlook is"

** Polls suggest viewers of the TV debate found independent centrist candidate Emmanuel Macron most convincing

** "Though opinion polls suggest Macron will be the next French president, we expect a few twists and turns in the presidential race yet. Le Pen’s chances should not be underestimated," says Dean Turner, economist at UBS Wealth Management

** Adds underperformance of banks suggests market has started to partly price in a Le Pen presidency

** BNP Paribas (LSE: 0HB5.L - news) -0.48% ytd, Societe Generale (Swiss: 519928.SW - news) +1.59% ytd, Credit Agricole (Swiss: ACA.SW - news) +4.2% ytd, STOXX 600 banks +4.6% ytd

** UBS WM sees political uncertainty ahead of the French presidential election likely to remain a drag, but still likes French equities on a fundamental level

** In event of Le Pen win, UBS (LSE: 0QNR.L - news) sees 10-20% probability of France leaving European Union, based on parliamentary, constitutional hurdles, polls showing French largely supportive of the single currency

** Le Pen win is unlikely - Opinionway poll on Wednesday sees Macron beating Le Pen in run-off vote by 62 pct to 38 pct

(helen.reid@thomsonreuters.com; +442075420402)