European Bank Shares Raised to `In-Line' at Morgan Stanley

By Adam Haigh

July 24 (Bloomberg) -- European bank stocks were upgraded to ``in-line'' from ``cautious'' at Morgan Stanley, which said investors may rotate their holdings into the industry.

``As a trading call we see good opportunities in banks as major sector rotation should lift the banks sector higher,'' London-based analyst Huw Van Steenis wrote in a note to clients today. ``We see valuation support with a number of possible catalysts for the sector.''

The Dow Jones Europe Stoxx Banks Index has fallen 28 percent this year, compared with a 21 percent drop for the Stoxx 600 Index, a benchmark for European equities.

The brokerage remains ``bearish on many fundamentals'' in the banking industry, Steenis also wrote in the note.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.