BUZZ-Capital Goods: BAML reshuffles ratings on valuation

** Capital (Other OTC: CGHC - news) goods sector in focus as BAML publishes its 2017 year ahead for the sector

** Broker upgrades Spectris (Other OTC: SEPJF - news) , Spirax-Sarco and ABB (LSE: 0NX2.L - news) to "buy", downgrades Atlas Copco (LSE: 0R82.L - news) , Assa Abloy (LSE: 0R87.L - news) and Legrand (LSE: 0MW7.L - news)

** BAML says short cycle recovery reflected in rich valuations for much of the sector, prefers self-help and late-cycle stocks

** Cautious on stocks with mining exposure: its key underperformers in the sector are Atlas, Sandvik (LSE: 0HC0.L - news) and Metso (Amsterdam: MS6.AS - news) (-2.1%); prefers stocks with oil and gas exposure

** Smiths is BAML's preferred UK stock, other key buys include Siemens (BSE: SIEMENS.BO - news) , Prysmian (EUREX: 3056144.EX - news) , SKF and Wartsila

** Spectris hits a three year high after upgrade , 2nd top FTSE 250 riser, Spirax also among top UK mid-cap gainers

** ABB up 2 pct

** Miton's Eric Moore bought more shares in Smiths last week (started position late 2016); has traditionally had little industrials exposure but market now favours cyclicals [