** Amid the French election uncertainty, Barclays says it prefers aerospace and defence companies that have limited exposure to the country's defence budget

** "While we are positive on the European defence budget outlook over the next few years, we think the stocks with exposure largely reflect this," it says

** It cuts Thales TCFP.PA to "underweight" from "equal weight" with PT of 167 euros, citing lower upside than peers and higher exposure to the budget

** It says investors should be looking to take advantage of "France-related weakness" to buy more Airbus AIR.PA and Safran SAF.PA shares (both "overweight"), as fundamentals of the commercial aerospace sector remain strong

** It cuts Airbus's PT by 5% to 191 euros on production constraints, but says the company has greater EBIT potential than peers

** Safran could trade sideways in the short term given the lack of Q2 earnings momentum, it says, noting U.S peer GE GE.N is a safer bet amid French political turmoil

** "That said, the de-coupling of Safran and GE stock prices since April 2024 ... offers an interesting entry-point for the former" - Barclays

** In May, before the snap election was announced, a defence ministry spokesman said France was considering cutting defence spending

(Reporting by Olivier Sorgho)

((Olivier.Sorgho@thomsonreuters.com))