STOCKS NEWS EUROPE-Back French CAC over German DAX -SocGen

New attempts by French President Francois Hollande to spur his country's sluggish economy should lift France's benchmark CAC equity index and enable it to continue outperforming Germany's rival DAX market, Societe Generale's equity strategists write in a research note.

"The CAC-40 started to significantly outperform the DAX-30 in mid-January. Market positioning is clearly enabling this trend to continue and even accelerate while lowering the French equity risk premium," writes SocGen (Paris: FR0000130809 - news) 's European equity strategist Roland Kaloyan.

Kaloyan backs several stock selections to highlight this - such as favouring the CAC-listed ArcelorMittal (Other OTC: ARCXF - news) over rival DAX-listed steel company ThyssenKrupp (Xetra: TKA.DE - news) , backing pharmaceuticals group Sanofi (NasdaqGM: GCVRZ - news) over German rival Bayer (Milan: BAY.MI - news) and preferring French insurer AXA (Paris: FR0000120628 - news) to German insurer Allianz.

In January, Hollande announced plans to cut French public spending by 50 billion euros ($69.31 billion) from 2015-2017 and ease the tax burden on companies, in a bid to revive growth and reduce record unemployment levels in Europe's second-biggest economy.

Although the European Commission has warned France over its budget deficit so far, Kaloyan says Hollande's plans should be positive for both French bonds and equities.

"Being 'cautious' and 'being worried' about France seems to be the general consensus when meeting European investors today. Any positive news will be a strong tailwind for French assets," he writes.

On a total return basis including dividends, the CAC has risen by around 3 percent since the start of 2014 - outperforming a 2 percent fall on the DAX which has slipped back after hitting a record high of 9,794.05 points in late January.

($1 = 0.7214 euros)

Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net