STOCKS NEWS EUROPE-Citi, BofA ML positive on UK housebuilders

Fundamentals for UK housebuilders for 2013 continue to be supportive, withrelatively stable underlying house prices and completions moving steadily highermeaning margins should continue to improve, Citi says. "We expect this to translate into good earnings growth and steady growth innet assets. The sector has enjoyed two years of share price outperformance, witha very strong performance in 2012," it says in a note. Bank of America Merrill Lynch also says it sees a number of positive trendsfor UK housebuilders that should drive demand and continue to feed the upgradecycle. "This, we believe, will drive share prices higher," BofA Merrill Lynch saysin a sector review, retaining its "overweight" stance on the UK housebuildersinto 2013. Citi says given the recent re-rating in the sector, a more muted share priceperformance is expected this year, but valuations appear to be well supported bythe trend in margins and returns. However, given the recent bounce in sector share prices of about 42 percentover the last six months, Citi downgrades its rating for Taylor Wimpey to"neutral" from "buy" on valuation grounds after a recent strong share priceperformance. Shares in Taylor Wimpey, which surged 75 percent in 2012, fall 4.1 percenton Wednesday. Citi maintains a "neutral" rating on Barratt, Redrow andBerkeley Group and retains "buy" ratings on Persimmon, Bellway and Bovis. BofA Merrill Lynch upgrades Berkeley from "neutral" to "buy" and adds thestock to its key sector picks as the bank has become significantly more positiveon Berkeley's cash return programme. Berekely shares gain 0.5 percent. Barratt and Bovis also remain on Merrill's list of top sector picks. Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net