Morgan Stanley's 28-page buy note puts a rocket under Reuters

A 28-page "buy" note on Reuters from Morgan Stanley did wonders for the information provider's share price yesterday. With Wall Street closed for America's Independence Day holiday, traders were happy for any kind of newsflow so when Morgan Stanley issued its bullish appraisal of Reuters they rushed for the stock, sending it to the top of the FTSE 100 leaderboard, up 6.5p to 188.5p.

According to the US broker, whose analysts have been to visit the management team at Reuters, cost savings at the UK information provider are running ahead of forecast. Presently, Reuters is expected to achieve pounds 45m of cost savings for the year, however Morgan Stanley reckons this figure is starting to look too conservative.

Meanwhile, things seem to be picking up in the world of capital markets as redundancies at investment banks, Reuters' key clients, have started to dry up thanks to rallying stock markets. Hence Morgan Stanley upped its earnings estimates on the UK group ahead of its first half figures later this month and upped its price target on the stock to 300p from 220p.

Earlier this year Reuters shares were rocked by the launch of a rival foreign exchange market information systems by Bloomberg. Bloomberg teamed up with EBS Trader, which runs foreign exchange market trading systems, to target more than 18,000 corporates who use the Reuters systems for information. However, Morgan Stanley yesterday played down the Bloomberg/EDS link-up as a competitive threat to Reuters as it argued that although their offering is cheaper, price is not necessarily sufficient to win customers. It reckons Reuters'product far superior to the Bloomberg/EDS offering.

Meanwhile, Vodafone fell 1.75p to 119.25p, Orange lost 12.5p to 510p and mmO2 gave up 1.75p to 53.25p amid new evidence that competition in the UK mobile phone market is continuing to hot up. Brokers drew attention to an industry publication which showed that there has been a material shift towards the subsidy of handsets by operators with Vodafone the most aggressive of the three. Although this is positive for phone retailers like Carphone Warehouse, up 3.5p to 94p, it is very negative for the industry as a whole.

Analysts reckon mmO2 will be worst hit because it generates over 85 per cent of its profits in the UK. Meanwhile a further blow to the group's share price came from a downgrade by Goldman Sachs. The US broker cut its rating to "underperform" from "in line" and told investors that the much hoped for sale of the group's German business to e-plus, a local mobile unit of Dutch carrier KPN, is unlikely in the short term. Goldman said that KPN looks content to grow e-plus organically at present.

In a quiet session, the wider FTSE 100 fell lost 3.3 points to 4,021.5 while the FTSE 250 dropped 0.2 to 4,987.1. Speculation that a bid for Britannic may soon be made public helped shares in the insurer rise 16.5p to 267p. The latest gossip is of a takeover from a continental European rival.

McCarthy & Stone gained 18p to 506.5p on hopes that John McCarthy, the group's chairman, will return with an improved takeover bid for the company. Market professionals reckon he is willing to pay as much as 575p for the shares in the company he does not already own.

Axis Shield rose 3.5p to 175p following the pounds 2.5m disposal of its autoimmune business. Baltimore added 3p to 35p as investors responded to news that the company had sold SelectAccess unit to Hewlett-Packcard for pounds 8.3m. The bid battle for IDS Group, the software company, hotted up yesterday. IDS shares gained 1.5p to 24.75p as Capital Stream, a US group, returned with a 24p a share cash offer. The bid values IDS at pounds 13.6m and trumps a management buyout offer backed by Schroder Ventures.

Transense Technologies ticked 2.75p higher to 24.5p on whispers that the company will unveil a major contract win next week. Toad lost 0.25p to 8.62p despite talk that the group will soon be make a series of presentations to a institutional investors in the Square Mile. Trafficmaster jumped 6p to 31.25p after announcing that its Smartnav navigation product has won a major order from DaimlerChrysler. Smartnav will now be fitted in the car maker's Voyager, Grand Voyager, Cherokee, Grand Cherokee and PT Cruiser models in the UK. Earlier this year Trafficmaster announced a similar deal with Peugeot.

GX Networks added 0.62p to 4.62p on whispers of upbeat newsflow from next week. More than 12 million GX shares changed hands yesterday amid heavy demand for the stock. Watermark, which provides a range of onboard care items to the airline industry, gained 8.5p to 104.5p as the company completed a number of meetings with analysts and institutions in the wake of last Wednesday's upbeat trading statement.