STOCKS NEWS EUROPE-Macquarie sees 15 pct equity return in 2014

Macquarie expects European equities to register a 15 percent return in 2014, almost all of which is likely to come from earnings revisions rather than multiple expansion.

"We are overweight Europe from a global perspective. It will experience impressive delta in 2014, not only in actual GDP growth but also in credit conditions, sentiment, and the underlying growth fundamentals," Macquarie analysts write.

European shares are also relatively cheaper than U.S. equities, trading on 13.2 times their 12-month forward earnings, against 15 times for U.S. stocks, and has the potential to see significant fund inflows from global investors, they add in their research note.

The current sell-side earnings forecasts of 12.7 percent growth in 2014 and 10.9 percent rise in 2015 are too low, Macquarie says, adding it expects the number to be 20 percent for both the years.

Diversified financials, such as UBS (Xetra: UB0BL6 - news) and Credit Suisse, top Macquarie's list of "outperform-rated" stocks, in which investors should have exposure in the early to mid-cycle of an expansion, the note says.

It also likes capital goods companies like Volvo and Ferrovial (Other OTC: FRRVY - news) , autos such as Volkswagen (LSE: 50IT.L - news) and Daimler (LSE: 0NXX.L - news) , and chemical companies such as BASF .

Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net