Market Report: Morgan Stanley puts Ladbrokes at the top of its betting slip

Bet on a Ladbrokes recovery is the message from Morgan Stanley’s own tipsters.

Just as Royal Ascot got under way, number crunchers at the top US firm put the bookmaker at the top of its betting slip.

They reckon Ladbrokes, up 5.1p to 122.1p, is still playing catch-up to its main rival, William Hill, in the online sector, but thinks investors should buy into the recovery story.

The broker upgraded the stock to overweight – in effect buy – with an increased price target of 150p. “Europe could be a hidden gem… and the valuation is cheap,” Morgan Stanley’s analysts added.

The FTSE 100 regained the ground lost in early trading as the UK’s benchmark index fell to near-five month lows, ending just 0.42 points lower at 6,710.1.

The prospect of a Greek debt default and the US Federal Reserve’s meeting tomorrow, which could give a clue to the timing of a possible interest rates rise, kept buyers on the sidelines.

An upbeat note from Credit Suisse blew British American Tobacco up 99.5p to 3,511p, and Imperial Tobacco up 71p to 3,246p, while British Airways owner IAG dropped 6.5p to 502p on the back of a share price slump from struggling rival Air France KLM which is cutting routes to keep costs low.

Elsewhere on the top flight, mining giant Rio Tinto dropped 61p to 2,745.5p as fears continue to simmer about the strength of the Chinese steel market. Steel prices are now at their lowest since April, with iron ore prices also under pressure.

Funeral services group Dignity, up 9p at 2,069p, is to snap up 36 of the 83 locations currently operated by Laurel Funerals for £38m in cash.

Over on AIM, energy efficient boiler designer Flowgroup slumped 9.5p – or 39 per cent – to 14.75p as it admitted a tax ruling from the European courts will lead to a “substantial reduction in the expected number of boiler installations in 2015”.

The European Court of Justice decided earlier this month that the UK’s reduced five per cent VAT rate on energy-saving products is in breach of EU laws.