UPDATE 1-UBS resumes coverage of 8 US banks, prefers brokers

June 30 (Reuters) - UBS' financial sector analyst Glenn Schorr resumed coverage of at least eight U.S. banks, including Goldman Sachs Group Inc (GS.N), and said he preferred brokers to universal banks and trust banks partly due to their healthy capital and liquidity positions.

"We think the brokers are in better relative shape than many financials given healthy capital and liquidity positions, less direct credit exposure, an improving funding outlook and their leverage to a rebound in capital markets activity," Schorr wrote in a note to clients.

Schorr, who rejoined UBS after leaving the firm in March, resumed coverage of Goldman with a "buy" rating and added the stock along with Citigroup Inc (C.N) to its most preferred lists, while removing Northern Trust Corp (NTRS.O) from the list.

Goldman is very well positioned to manage through the cycle given its strong capital ratios, manageable legacy risk exposures, limited direct consumer and corporate credit exposure, and top notch risk management, Schorr said.

Goldman will also continue to take advantage of revenue opportunities and will likely keep a good portion of its market share gains from the dissolution and transitioning of some of its competitors, Schorr said in a note to clients.

He resumed coverage of Citigroup, JPMorgan Chase & Co (GS.N), Morgan Stanley (MS.N), State Street Corp (STT.N), Northern Trust, Greenhill & Co Inc (GHL.N) and Bank of New York Mellon Corp (BK.N) with "neutral" ratings. Schorr has a short-term "buy" rating on Citigroup stock.

"Citi's begun to get its bearings, but it's not smooth sailing just yet," Schorr said, referring to the bank's capital appearing under control, although in the face of ongoing credit losses and technical overhang from the preferred stock conversion.

Citigroup, which is looking to convert billions of dollars of preferred stock into common stock to boost capital, has lost $36 billion in the last six quarters and is one of the banks that did not get approval to repay U.S. government bailout funds.

Shares of Citigroup closed at $3.02, Goldman at $149.36, Morgan Stanley at $29.10 and JPMorgan at $34.60 Monday on the New York Stock Exchange. (Reporting by Tenzin Pema in Bangalore; Editing by Gopakumar Warrier)