UBS has added to growing sentiment from investors against Australian banks, reducing its position in the sector.

In an update since the lacklustre reporting season, strategist David Cassidy told clients today the Swiss bank has also exited Computershare, APN News & Media and Ten Network Holdings on disappointing results.

But despite US-exposed stocks struggling on fears of double-dip recession in the world’s biggest economy, UBS continues to hold Brambles and has added some additional cyclical exposure, albeit from a low level, via Sims Metal Management and Aristocrat Leisure.

UBS has also added Flight Centre on a “strong result” and “undemanding” price to earnings ratio of 13 times full-year 2011 earnings.

The bank has also added Leighton Holdings for mining services/capital expenditure exposure.

“We are staying underweight industrial defensives on valuation grounds and given our positive market view,” said Cassidy. “We have switched out of Telstra into Woolworths post results. We retain overweights in Resmed, AGL Energy, Crown Limited.

“In non-bank financials we have added Insurance Australia Group and Challenger Financial Services Group where we see a solid earnings outlook and supportive valuation.

“We have exited ASX Limited.”

UBS is underweight banks after reducing from neutral, but has increased its overweight exposure to mining and mining services on its positive view on markets.

Analysts are concerned of the banks growth profile due to a modest earnings outlook and revenue headwinds.

“We have retained a pro-cyclical tilt via mining and industrial cyclicals,” said Cassidy.

UBS has retained its underweight position in real estate investment trusts.

(Source: TheAustralian.com.au)