BUZZ-European capital goods: challenging year ahead -JPMorgan

** JPMorgan sees another challenging year ahead for European capital goods sector, with falling commodity prices, weak PPIs and weaker emerging market vs developed market growth weighing on performance

** "Most investors we speak to now have much reduced expectations after a disappointing 2014; a European recovery, should it materialise, represents the upside option," broker says

** Says capital goods stocks may underperform less in 2015 than in 2014 following recent de-ratings and declines

** JPMorgan's top picks: Andritz (Other OTC: ADRZF - news) , GKN (LSE: GKN.L - news) , Melrose, Philips (Amsterdam: PHIA.AS - news) , SKF, Smiths, Wartsila & Zumtobel

** Cuts German light bulb maker Osram to "underweight" vs "neutral", saying it is behind the curve in its rapidly changing industry

** Osram shares fall 4.4 pct to their lowest level in a month, making them one of the biggest decliners on Germany's mid-cap index. Stock down 25 pct YTD, while MDAX is flat (RM (LSE: RM.L - news) :maria.sheahan.thomsonreuters.com@reuters.net)