London stocks were highlighted by JPMorgan for their low valuations, improved political backdrop and a dividend yield of 4.1% which is the highest among large developed markets.
Equity strategists at the US investment bank previously had a preference over the past two and a half years for UK large caps over small caps, but have reversed this in recent weeks.
Today they emphasise their new 'overweight' stance on the more domestically focused FTSE 250 over the larger and more multinational names of the FTSE 100 view, liking UK consumer-facing companies in particular, also real estate and housebuilders.
The preference for mid-cap domestic names is partly as the pound is firmer, but also supported by the 250's "meaningful past underperformance, cheaper valuations, likely start of BoE rate cuts, stronger domestic activity momentum".
"The backdrop for UK equities is looking favourable, on attractive valuations, improved political and policy backdrop and potentially lower bond yields, making dividend yields more attractive again," the equity strategists said.
As well as a higher dividend yield, UK stocks also have a Beta value lower than 1.0, "which could come in handy as bond yields move lower and broader markets likely keep consolidating, as per our view". Beta relates to stock volatility versus the market, with lower than one signifying a share is less volatile than the market.
"The elections event risk is behind us, and the new government is likely to provide more fiscal credibility and stability, with focus on domestic agenda, homebuilding and the consumer,"
Within the wider European stock market, the JPMorgan team remain "unexcited" by the eurozone, expecting Euro Stoxx 50 to "keep consolidating", as it has largely done since March, at least through the summer.
Eurozone growth momentum is seen as slowing, and the bank's strategists have a negative view of EZ consumer plays in particular, autos and luxury most of all.
"We do think that this extended consolidation phase will ultimately become an opportunity to turn bullish, perhaps sometime towards the year-end," they added.