* Norway, Sweden, Denmark eye further gains
* Technicals, options, fund flows all support
* Mirrors moves in currency, government bond markets
By Sudip Kar-Gupta
LONDON, July 16 (Reuters) - Major Nordic stock markets are set to further outperform their peers as the euro zone debt crisis drives increasing numbers of investors to single out the region as western Europe's safest equity haven.
Options market positioning, fund flows and charts all signal further equity gains, a trend that mirrors moves in currency and bond markets, in which investors have snapped up Danish government bonds and the Norwegian crown.
Until recently, those seeking euro zone equities preferred to put their money into German stocks, regarding the currency bloc's biggest economy as relatively risk-free.
But faltering growth in Germany and the big bills Berlin could face for bailing out weaker peripheral states has increased the attractiveness of the Scandinavians to the north.
While any slowdown in Germany would weaken the broader European economic outlook and hit markets across the region, including the Nordics, there was still relative value to be found, analysts said.
"We think the Nordic equity indices will continue to outperform other markets in Europe," said Michael Adam Adler, head of equities at Denmark's Alm Brand Bank Asset Management, which increased its Nordic equity holdings last month.
He is far from alone. Statistics from fund flow data provider EPFR Global showed inflows into non-euro zone Nordic markets (Finland is in the euro zone) at the expense of the German market over recent weeks.
German equity funds saw outflows of $197.6 million for the week ending July 11. By contrast, Denmark had a relatively small outflow of $1.8 million while Norway had inflows of $6.7 million.
For the week ending June 27, German equity funds had outflows of $476 million, while Danish funds had inflows of $4.7 million, EPFR data showed.
That money looking for a safer home has helped Denmark's blue-chip market outperform handsomely in the year to date.
The OMX Copenhagen index is up nearly 20 percent, almost twice as much as Germany's DAX and beating Norway and Sweden as well as other traditional safe havens such as the UK and Switzerland.
By contrast, the leading index in euro zone member Finland has fallen more than 2 percent.
For the year, Norwegian and Swedish stocks have lagged Germany. However, since the end of May, when fresh worries resurfaced over the debt burdens of Greece and Spain, the DAX has risen around 4 percent, while the Stockholm index has risen 6 percent and the Oslo exchange is up around 9 percent.
"We have a fairly significant exposure to some of the Scandinavian markets. Norway's economy is doing pretty well and Sweden's banks have been doing very well because they have a low cost of funding," said Royal London Asset Management fund manager Andrea Williams.
While Nordic countries are not the only ones in Europe free of direct liability for the euro zone debt crisis, they can look forward to steady growth this year, unlike Britain and Switzerland.
As a result, investors are positioning themselves for further gains, data from index provider Nasdaq OMX showed, with the amount of "call" options out on the OMX Copenhagen index - a bet on future gains - rising to 3,595 in June from 2,520 in May.
Similarly, the amount of "call" options on the Swedish OMX Stockholm 30 index rose to 2.08 million in June from 1.71 million in May.
The Copenhagen index also has technical chart support for an extension of its outperformance over the DAX as it continues to trade comfortably above i t s 200-day simple moving average, while the DAX is struggling just above the moving average line.
"Long Copenhagen, short DAX looks like an OK relative play," said SEB analyst Anders Soderberg, referring to a trade that bets on further gains on the Danish market along with a bet on losses in German shares.
"The OMXC20 has clearly been outperforming since early June and currently broken higher from a sideways congestion range, so more of the same is likely," he added.