** Shares in Swedish defence firm Saab SAABb.ST rise 4.4% to the top of pan-European STOXX .STOXX 600 index after a double-upgrade to "overweight" from "underweight" by Morgan Stanley

** The brokerage raises its PT on Saab by 30% to SEK 700 citing a "compelling earnings upgrade story" that is not yet fully reflected in market consensus estimates

** MS adds the firm is well positioned to benefit from accelerating European rearmament, NATO expansion and defence funding from the European Union

** It notes recent contract momentum lifts estimated backlog to over SEK 300 billion ($31.13 billion) by 2026, showing medium-term demand remains underappreciated by the market

** The broker downgrades Norwegian peer Kongsberg KOG.OL to "underweight" from "equal weight" as its recent Capital Markets Day showed that upside is already priced in

($1 = 9.6379 Swedish crowns)