STOCKS NEWS EUROPE-Too early to boost exposure to EM -UBS

Despite the outperformance of shares of European companies with a strong exposure to emerging markets in recent weeks, UBS (Xetra: UB0BL6 - news) strategists see no major improvement in emerging economies that would justify boosting exposure to these stocks.

"For one, we are not convinced that emerging markets' macro fundamentals have seen a major shift and stick to our view of a developed-markets-led economic recovery," they write in a note.

Instead, the strategists recommend looking at stocks that have underperformed so far this year and which have better earnings momentum than the market and that look attractively valued relative to the market, citing names such as IAG, Siemens and Lloyds.

"There has been brutal sector, stock and style rotation within the market. But we see this driven by investor positioning, hedge fund de-leveraging and the need for a pause, rather than a 'regime change'," they write.

"We see these recent moves as all part of the process as we move from a re-rating driven bull market to a much choppier, earnings-driven one."

Reuters Messaging: blaise.robinson.thomsonreuters.com@reuters.net