Analyst sued by LVMH twists knife

THE star City analyst at the centre of a £70 million claim from French company LVMH alleging her research was biased has lowered her recommendation on the luxury goods sector that the firm dominates.

Claire Kent of investment bank Morgan Stanley has told investors that she has turned 'cautious' on the industry.

The news started a slide in shares in LVMH, whose brands include Louis Vuitton handbags, Guerlain cosmetics and Veuve Clicquot champagne.

Lawyers for the company told a Paris court that Kent's opinions were biased because of her firm's business links with LVMH's principal rival, Gucci.

In a landmark case, LVMH claims that Kent and her team gave investors biased advice over four years because Gucci was a Morgan Stanley client. Morgan Stanley is countersuing over what it calls 'unfounded, abusive and injurious claims'.

Kent has retained her neutral opinion on LVMH since May 2000, when she cut her recommendation from 'outperform' or 'buy' to 'neutral'. LVMH's share price subsequently fell by more than a third.

Last week, she cited high valuations of individual stocks, including LVMH, and the dollar's weakness against the euro for her change of heart on the sector.

LVMH is the first major company to go to court in Europe claiming that the views of equity analysts are influenced by work carried out by their firm's investment bankers.