** Chemical maker Dow's DOW.N shares rise 4.3% to $34.72, after RBC Capital Markets upgrades stock to "outperform" from "sector perform"

** Brokerage also raises PT to $40 from $29, representing an upside of 20.2% to stock's last close

** Says it is turning more positive on DOW because disruptions in Europe are tightening supply and could lift co's polyethylene margins by more than 10 percentage points in Q2 to Q3

** Even if the disruptions are temporary, margins could stay higher for longer - RBC

** Brokerage also expects seasonal demand to improve, along with about $1.1 billion in ongoing cost savings

** Sees less uncertainty around DOW's investment plans because supply-demand conditions and earnings are improving

** Six out of 21 brokerages rate the stock "buy" or higher, 14 "hold" and one "sell"; their median PT is $30 - LSEG-compiled data

** Including session's moves, DOW up 49.04% YTD

(Reporting by Sumit Saha in Bengaluru)

((Sumit.Saha@thomsonreuters.com;))