PARTYGAMING broke back through its issue price for the first time since September’s disappointing trading update as Morgan Stanley became the latest heavyweight stockbroker to throw its weight behind the online poker behemoth.

In a hefty circular entitled “Winner Takes All?”, the US stockbroker expresses confidence that the online penetration of gambling will grow from its current low level of 4 per cent. Jamie Rollo, analyst, says that the company’s launch last month of a new gaming platform removes the rising threat posed by its “skins” — which provide it with players and marketing services — and allows the company to cross-sell new products to its existing player base.

Mr Rollo suggests that this development will enable poker revenue growth to accelerate, and forecasts €94 million (£64 million) of additional casino revenue in 2006, adding 13 per cent to earnings per share.

Morgan Stanley suggests that PartyGaming’s shares warrant a premium multiple if it proves to be a long-term winner and cites a possible 238p price on the most bullish scenario. With Morgan Stanley settling for a more sober 130p target and “overweight” recommendation, the shares added 8½p at 118p, against July’s 116p issue price.

Milder than forecast weather in America put further pressure on oil prices, which dragged the shares of oil majors lower for the second session in succession. Cairn Energy, which is hosting an analysts’ trip to its operations in Rajasthan, gave up 20p at £18.35, with BP down 3p at 641½p and BG Group 3¼p lighter at 545p. However, the FTSE 100 closed 13.6 better at 5,491.

ITV perked up 1¼p at 109p as Brandes Investment Partners, the San Diego fund manager famed for its astute value investing strategy, declared a raised 5.11 per cent stake in the broadcaster, against 4.04 per cent previously.

SABMiller advanced 9p at £10.73 as Anheuser Busch, the US brewer of Budweiser, signalled an end to the price war that it had instigated this year in an attempt to boost sales. Panmure Gordon suggested the change of tack should be positive for the South African brewer and repeated its “buy” recommendation and £11.75 target. Further, the broker suggested that there should be scope for earnings upgrades once the company has refinanced the debt it took on through this year’s acquisition of Colombia’s Bavaria to a lower coupon.

Royal & SunAlliance improved 2¾p at 116¾p as UBS raised its price target — from 92p to 110p — after a meeting last week with George Culmer, finance director.

The Swiss broker has increased its earnings forecasts following third-quarter results to reflect improved underwriting and, while it contends that the shares are fully valued, but not stretched, particularly if further cost savings can be found.

Royal Bank of Scotland added 6p at £19.09 on switching out of Barclays, down 6½p at 595½p as analysts branded its pre-close trading statement as “slightly disappointing”.

• NEW YORK: Shares ended slightly lower after a raft of upbeat economic data offered only a temporary boost to the market. The Dow Jones industrial average was down 2.50 points to close at 10,888.20.

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