European Stocks Raised to `Overweight' at Morgan Stanley

By Andrew Rummer

Aug. 7 (Bloomberg) -- European equities were upgraded to ``overweight'' at Morgan Stanley, which said the stock market slump has left valuations ``attractive.''

``We believe a bear market rally is probable here given the sharp sell-off in stocks in the last two months,'' London-based analysts Graham Secker and Charlotte Swing wrote in a note dated yesterday. ``The strategic outlook remains difficult due to the probability of significant earnings downgrades and the need for companies to strengthen their balance sheets.''

The Bloomberg European 500 Index of the continents largest companies has fallen 21 percent this year.

To contact the reporter on this story: Andrew Rummer in London at arummer@bloomberg.net