STOCKS NEWS EUROPE-Lloyds heads firm UK banks as UBS upgrades

Banks lead the UK blue chips higher, providing nearly a thirdof the FTSE 100 index's 0.4 percent advance, with Lloyds Banking Group a strong performer, up 2.3 percent as traders cite the impact of anupgrade in rating by UBS. The bank ups its stance on the part-state-owned lender to "buy" from"neutral" with an increased target price of 60 pence, up from 50 pence. "Lloyds' investment strategy is simplest of the UK domestic banks. The storyis defined with the group focussed on execution. We think Lloyds will deliverrising margins, falling costs and falling provisions, which will provide a verystrong upswing to profitability and EPS momentum over the next few years," UBSsays in a note. In addition to upgrading Lloyds, the bank also increases its price targetsfor Royal Bank of Scotland, to 415 pence from 328 pence, and Barclays, to 315 pence from 255 pence, to reflect the better growth andprofitability picture that is beginning to emerge for UK banks. "We believe that the UK experiment of combining fiscal and monetaryausterity is over we expect to see 15 billion pounds more gross mortgage lendingin 2013," UBS says in a separate UK Banks Monitor. RBS remains a key "buy" rating for UBS, with Barclays rated "neutral". RBS also adds 2.3 percent and Barclays gains 2.1 percent. Reuters messaging rm://jon.hopkins.thomsonreuters.com@reuters.net