BROKERWATCH LSE upped to 'equal-weight' at Morgan Stanley in sector review

LONDON, Jul 24, 2008 (Thomson Financial via COMTEX) -- MS | Quote | Chart | News | PowerRating -- Morgan Stanley upgraded London Stock Exchange Plc. to 'equal-weight' from 'underweight' and its sector rating on banks and diversified financials to 'in-line' from 'cautious', market sources said.

In a note published this morning, Morgan Stanley said it is upgrading London Stock Exchange as the group has a more balanced risk-reward profile following its recent share price decline. It also raised its LSE price target to 958 pence from 945 pence.

However, it said its preference in the sector is for Deutsche Boerse AG. which it retained at 'overweight', with a price target cut to 100 euros from 115 euros.

The broker said the Frankfurt-based exchange operator is experiencing strong growth in derivatives and could surprise on the costs front.

Morgan Stanley remained 'equal-weight' on Bolsas y Mercados Espanoles SA. with a price target cut to 28.5 euros from 32.9 euros and 'underweight' on Hellenic Exchanges SA. with a price target rise to 9.75 euros from 14 euros.

The broker said that it sees the biggest downside risk to market expectations for the Spanish and Greek groups.

Morgan Stanley also upgraded its stance on the banks and diversified financials sector on valuation grounds. joanne.frearson@thomsonreuters.com jf/jms

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