STOCKS NEWS EUROPE-UK housebuilders boosted by bullish DB note

Shares in UK housebuilders post strong gains, with traders citing a bullish note on the sector from Deutsche Bank (Xetra: DBK.DE - news) in which the investment bank says their sensitivity to interest rates has been overestimated.

Barratt Developments (LSE: BDEV.L - news) leads the blue chips higher with a 3.4 percent rise, while among midcaps Taylor Wimpey adds 3.1 percent and Bovis Homes (LSE: BVS.L - news) climbs 1.1 percent, as Deutsche Bank names the trio as its top picks.

Deutsche Bank says UK housebuilders' shares - which were among the top performers on the market in 2013 - have been weak recently due to concerns that the Bank of England could raise interest rates sooner than previously expected.

"However, with easy affordability, significant lending aspirations from banks combined with a willingness to reduce their spreads further, we believe the share price reactions have been overdone," it says.

The Thomson Reuters UK Homebuilding index has risen around 3 percent in 2014. It doubled in value during the past three years, underpinned by tight supply and UK initiatives to spur the job-intensive sector, such as the 'Help-to-Buy' mortgage scheme.

Data from Thomson Reuters StarMine also suggest the housebuilders could extend their share price gains.

Analyst sentiment remains bullish, even towards the best performers. Around three-quarters of StarMine's top-rated analysts have "buy" or "strong buy" ratings on Barratt Developments and Bovis Homes, which have gained about 13 percent and 7 percent respectively this year.

The FTSE 250 index, by contrast, has risen around 1 percent this year.

StarMine shows that the companies in the sector trade at an average discount of 76 percent to intrinsic value.

The data rank companies based on the relationship between a firm's stock price and its most likely growth trajectory, using historical models and adjusting for analyst bias.

Reuters messaging rm://tricia.wright1.thomsonreuters.com@reuters.net