** Ahead of Munich Security Conference starting on Friday, Jefferies lays out its view on how to play a potential Ukraine-Russia ceasefire

** "Whilst the finer details of what a settlement looks like remain unknown, (...) any tangible newsflow suggesting a resolution will be quickly priced in by markets," it says in a Tuesday note

** It sees any initial negative reaction for aerospace and defence names as a buying opportunity as Europe bulks up on its defence; points to Babcock BAB.L, BAE Systems BAES.L, Thales TCFP.PA, Avon AVON.L, Chemring CHG.L and Qinetiq QQ.L as longer-term beneficiaries

** In building and construction space, it views companies with Eastern European footprints as key beneficiaries, including CRH CRH.N, Heidelberg HEIG.DE, Holcim HOLN.S, Kingspan KSP.I, Saint-Gobain SGOB.PA, Sika SIKA.S and Ferrovial FER.MC

** It adds construction market suppliers are also likely to see outsized benefits and those to monitor include Siemens SIEGn.DE, Schneider Electric SCHN.PA, Prysmian PRY.MI, Siemens Energy ENR1n.DE, Vestas VWS.CO, Daimler DTGGe.DE and Volvo VOLVb.ST

** "Any improvement in European growth prospects will also be positive for economic growth (and commodities), whilst companies with residual operations in Ukraine/Russia should also benefit" - Jefferies

** Thus, in the resources space, it says stocks to watch are ArcelorMittal MT.AS, Total TTEF.PA, BP BP.L, Saipem SPMI.MI, Subsea 7 SUBC.OL, TechnipFMC 1T1.F, BASF BASFn.DE, Stora Enso STERV.HE, Billerud BILL.ST, Victrex VCTX.L, Elementis ELM.L, Synthomer SYNTS.L and Bodycote BOY.L

** Among airlines it notes that Wizz Air WIZZ.L has the greatest fleet capacity to and from the region, while in airports, ADP ADP.PA and Fraport FRAG.DE will also likely benefit as key transport hubs

** Since Ukraine/Russia produce critical materials for semiconductors, better access would alleviate supply chain concerns, Jefferies notes, adding that ASML ASML.AS, Infineon IFXGn.DE and STMicroelectronics STMPA.PA are likely beneficiaries

(Reporting by Anna Pruchnicka)

((anna.pruchnicka@tr.com))