Market report: Thursday close

THE insurance industry has received a well-timed boost from another of the big market players. US securities house Morgan Stanley has raised its recommendation on the entire sector to 'outperform', claiming the outlook for new business margins had improved, with the sector leaders expected to benefit the most.

The upgrade comes a day after rival Goldman Sachs took a bullish view of prospects for the insurers, raising its rating from 'neutral' to 'overweight'. It told clients the profit warnings that have plagued the sector this year would soon end and there might be pleasant surprises on the earnings front in 2002.

Prudential, up 32p at 816p, is pick of the bunch for Morgan Stanley and Goldman. MS has raised the shares from 'neutral' to 'strong buy'. Legal & General, up 6 3/4p at 161 1/4p, is also in demand with MS confident the shares will outperform. It has set a target price of 170p. Other companies in the sector to improve included CGNU, up 28 1/2p at 870p, with broker Dresdner Kleinwort Wasserstein rating the shares a 'trading buy' and telling clients they looked good value for money at these levels with a further 100p upside in the price. Friends Provident was 5 1/2p firmer at 202p as MS upgraded the shares to 'outperform'.

The rest of the market was taking a breather after the exertions of the past few days, culminating in a 2.2% surge on Wall Street overnight that carried the Dow back above 10,000 for the first time in four months. Even so, the FTSE 100 index was able to extend its lead this week with a rise of 36.3 at 5369.8.

Technology issues continued to build up a head of steam, reflecting another strong performance by the hi-tech Nasdaq market overnight. MmO2 rose 4 1/2p to 91 1/2p, ARM Holdings fell 1/2p to 407 1/2p and Kingston Communications gained 7p to 130p. Computer and IT specialist Sage ran into profit-taking after receiving a warm welcome for its final results on Wednesday, the shares slipping 11 1/4p to 254 3/4p.

A clutch of brokers has turned positive about prospects for Reed International, up 5 1/2p at 579 1/2p, after joint venture Reed Elsevier said it will meet its earnings forecast for 2002. Broker Credit Lyonnais Securities has repeated its 'buy' recommendation on the shares while rival ABN Amro has been telling clients to add to their holdings. US investment bank JP Morgan has awarded the shares a 'market perform' rating. This spilled over into rival Pearson, up 25 1/2p at 890 1/2p, where Deutsche Bank has repeated its 'buy' recommendation.

Rupert Murdoch's satellite broadcaster BSkyB fell 43p to 893p after Goldman Sachs dropped the shares from its 'recommended' list to 'market perform'. It remains a favoured media play but is trading just below Goldman's 1000p target price. An Office of Fair Trading review of wholesale programming may have an impact on sentiment in the shares, rather than fundamentals.

There was further heavy turnover in Anglo-Dutch steelmaker Corus as the price fell 1 1/2p to 71p. Several large lines of stock went through the market, including three million shares at 71p and 2.5m at 75p.

Broker UBS Warburg has slashed its target price for Rolls-Royce, 3 1/2p better at 176 1/2p, from 200p to 150p and continues to rate the shares just a 'hold'.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

The Daily Mail's Geoff Foster on yesterday's trade
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