UPDATE 1-Goldman Sachs raises European capital goods sector

June 11 (Reuters) - Goldman Sachs upgraded the European capital goods sector to "attractive" from "neutral" saying current share prices offer an attractive entry point into the sector.

"While upcoming second-quarter results are likely to highlight once again the current difficult operating environment for capital goods companies, we believe this is the right time to use any share price weakness to build positions in the sector," Goldman Sachs analysts wrote in a note dated June 10.

Goldman sees potential for a structurally higher share of fixed investment in global GDP, allowing the capital goods sector to continue to grow at two times the global trend GDP in the next up-cycle.

Fixed investment cycle is a key driver for the capital goods sector, said Goldman.

"Our economists expect resilient domestic demand growth from emerging markets, particularly the BRICs (Brazil, Russia, India and China), to be one of the driving forces of an export-led recovery in advanced economies over the next couple of years," said Goldman.

Goldman also upgraded Electrolux AB (ELUXb.ST) and Sandvik AB (SAND.ST) to "buy" from "sell" and added the companies to its Conviction Buy List.

For the rating changes, double-click on [ID:nWNAB8676] (Reporting by Mary Meyase in Bangalore; Editing by Kavita Chandran)