If the reserved Swedes are usually loath to call attention to themselves, Stockholmers this year are downright showing off. Sweden's capital has been designated the 1998 Cultural Capital of Europe.

The 15-nation European Union chooses a different city as cultural capital each year. Last year it was Thessaloniki in Greece, and in 1999 it will be Weimar, Germany.But for now it's Stockholm's time to preen.

Bright orange banners flutter against the city's subdued brown buildings, pointing the way to the more than 1,000 exhibitions and events for the year-long program, ranging from venues for the performing arts to a crayfish festival, from the merry to the magnificent.

With the arrival of summer, when the sun barely dips below the horizon and the sky still glows at midnight, Swedes spend as little time as possible indoors, so many of the events for June, July and August will be held outside.

There will be plenty of foreign visitors joining them. About half of the city's 1.8 million hotel guests last summer were foreigners, and hotel bookings have increased about 10 percent this year, tourism officials say.

"The whole idea has been to see to it that Stockholm gets noticed. So far it looks like we've succeeded," says Eric Sjoestroem, a spokesman for the Cultural Capital program.

The proud Stockholmers will be quick to point out some of the things that make their city unique. For example, some of the country's best salmon fishing can be found in the center of the island city, and the lake water in most parts of the city is clean enough to drink.

Water figures in many of the summer's events - either as backdrop or main element - just as it is central to the city's life. Stockholm is strewn across 14 islands, straddling the point where Lake Malaren drains into an inlet of the Baltic Sea.

It's a handsome city of 1.6 million people, filled with parks, squares and airy boulevards. There are plenty of glass-and-steel skyscrapers, but you're never more than a five-minute walk from a medieval neighborhood or lakeside promenade.

On the downside, Stockholm is expensive. Visitors to restaurants and bars will find that the capital's residents eat and drink very well, but they don't do it cheaply. Dinner with wine runs about $50 a person and up; a bottle of beer in a respectable bar is about $6.

Lunch can be a far better deal. Most restaurants serve a prix-fixe lunch called the "dagens raett" that includes entree, bread, salad and coffee for about $8.

For those who favor do-it-yourself takeout, supermarkets are plentiful, but not nearly as much fun as the covered markets called "saluhalls." The one in the old-money neighborhood of Oestermalm is a special favorite with its soaring basilica-like roof and stands selling local delicacies such as reindeer meat and silky herring marinated in an array of sauces.

Visitors who come in mid-August can take part in one of Sweden's favorite rituals, the crayfish festivals. They cook up a big mess of the crustaceans, don funny hats and tell foreigners that they're expected to down a shot of aquavit with each crayfish, a feat few can manage for very long.

A notable early summer spectacle will be June 13's Concerto Borealis, when bell ringers at all of central Stockholm's churches join in playing a piece specially written for their bells. On June 26 begins the three-day Ballad Festival along the edge of sprawling Lake Malaren.

Throughout the summer the waters of Lake Malaren will be full of boats in a series of special events: a steamboat festival July 10-14, a tall ships gathering July 16-20, and throughout the summer a chance to ride in updated versions of the rowboats that once transported commuters between the islands.

Then comes the Water Festival Aug. 7-15, a week of fireworks, often-bizarre performance art, and pop concerts. Previous festivals have featured the likes of Iggy Pop.

The water is also an important element in Stockholm's life in another aspect: It rains a lot. On days when the summer sun is overtaken by rain, the Cultural Capital program offers much of interest indoors: a showing of all of Ingmar Bergman's films (with English subtitles) from June 23-Aug. 5, several "neo-circuses" a la the noted Cirque du Soleil.