UPDATE 1-RESEARCH ALERT-Citigroup upgrades UK real estate sector

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Sept 25 (Reuters) - Citigroup upgraded the UK real estate sector to "neutral" from "underweight" as it envisages a recovery in direct real estate, but said it remained unclear on the timing.

In a research note, analyst Harry Stokes said while he sees glimmers of light in lower interest rates and profitable lending margins, he also sees near-term risks associated with global financial services and the UK economy.

"The level of tenant resilience is unclear as the economy drifts towards recession, and the Bank of England will wish to be comfortable with its inflation strategy before it cuts interest rates," he added.

The brokerage raised its price target on Land Securities Group (LAND.L) to 1550 pence from 1450 pence reflecting a slight fall in risk-free rate and upgraded the stock to "buy".

Citigroup also raised its price target on Liberty International (LII.L) to 810 pence from 790 pence.

It reiterated a "sell" rating on the stock. (Reporting by Srikanth Srinivasa in Bangalore; Editing by Jarshad Kakkrakandy)