Morgan Stanley says Bulgari’s expected price-to-earnings ratio represents a 23 percent discount to its five-year average.

"This presents a buying opportunity in our view," it says in a note.

"On our revised valuation scenario, we see a highly attractive reward profile, which suggests 13 percent downside and 64 percent upside potential to the current share price."

Morgan Stanley also says it is lowering its earnings forecasts by 5-16 percent over the next three years to reflect tough trading in Europe and the United States, coupled with expectation of lower operating margins.

08:08GMT 02Sept2008-Alcatel-Lucent falls as new management team named ---------------------------------------------------------------- -----

Shares in telecom gear maker Alcatel-Lucent drop 1.4 percent, trimming recent hefty gains, after the company named its new top management.

"The appointment comes quicker than what the market had expected. The stock has recently been rising on hopes of a new management team capable of a turnaround. Now that the announcement has been made, there is no more catalyst," a trader says.

The stock had gained around 30 percent since mid-July. It is still down around 60 percent since December 2006.

07:53GMT 02Sept2008-UK housebuilders up on govt support plan ------------------------------------------------------------

Shares in British housebuilders climb sharply after the government unveils measures to boost the slumping housing market, including a plan to offer five-year interest-free loans to some first-time buyers.

Taylor Wimpey shares are 8 percent higher at 60.5 pence, making them the biggest gainers in the FTSE 250 <.FTMC>, while shares in Persimmon , Bovis Homes , and Barratt Developments are up 3.5 to 6.1 percent.

"This could help the housebuilders shift through their stock," Kaupthing Singer & Friedlander analyst Kevin Cammack says.

"The market’s thinking that if they can turn work-in-progress into cash more quickly, it will help keep them within their banking covenants."

07:49GMT 02Sep2008-Afren climb as Morgan Stanley starts as "overweight" ---------------------------------------------------------------- -------

Shares in Afren. rise 1.4 percent as Morgan Stanley initiates coverage on the West Africa-focused oil and gas group with an "overweight" stance and 160 pence target citing valuation grounds.

The broker says the shares have underperformed recently and the current price offers investors an attractive entry point.

Morgan Stanley says newsflow will pick up during the second half of 2008, with catalysts including a planned main market listing in the UK by the end of 2008 and potential for further asset deals in West Africa.

07:40GMT 02Sept2008-Hays slides on recruitment slowdown fears -------------------------------------------------------------

Shares in Hays Plc slide as much as 5.8 percent to below the 90 pence mark after the British recruitment firm delivers better than expected 2008 results but warns on short-term softness in two of its key permanent hiring markets.

"The company has said that demand for temporary recruitment appears to have flattened out and demand for its permanent placements continues to fall," Panmure Gordon & Co analyst Mike Allen says in a note. "The key question is what will happen in 2009 with demand for permanent recruitment still falling in the UK and Australia."

07:43GMT 02Sept2008-Commodities lead Europe shares down

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European shares drop early, led by commodity stocks, following sharp falls in oil and metal prices.

The FTSEurofirst 300 <.FTEU3> index of top European shares is down 0.4 percent at 1,185.01 points.

Oil extends losses to its lowest since mid-April extending the previous day’s fall on initial signs that a weakened Hurricane Gustav spared major Gulf oil facilities.

BP , Total , StatOilHydro and Royal Dutch Shell fall by 1-2.4 percent.

06:28GMT 02Sept2008-New STOXX index entrants in focus

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ABB , Bayer , British American Tobacco , and Iberdola are in focus after STOXX announces that the companies are entering the Dow Jones STOXX 50 <.STOXX50> index in its latest reshuffle.

Out go BT Group , Fortis , HBOS , and Lloyds TSB

.

Alstom joins the Dow Jones Euro STOXX 50 index <.STOXX50E>, while Alcatel Lucent is exiting the index.

06:07GMT 02Sept2008-Index futures point to weak open, oil eyed --------------------------------------------------------------

European index futures point to a weak open in Europe, tracking falls in Asia, as oil trades sharply lower, potentially hurting heavyweight energy shares.

Futures for the DJ Euro Stoxx 50 , German DAX futures and French CAC futures are down 0.4-0.5 percent.

For more double click on <.EU > European companies reporting:

Criteria Caixa Interim Hays Prelim No major U.S. companies due to report

Major macroeconomic data (GMT):

0900 EZ PPI Jul

1400 US Const’n spend July

1400 US ISM Manuf’g Aug

Among stocks going ex-div on Tuesday:

ArcelorMittal Reuters Messaging rm://blaise.robinson.reuters.com@reuters.net