Morgan Stanley places an “underweight” rating on Lloyds banking group. It says first-half figures were reassuring but warns of lower improvement ahead, with a slowing down of its book re-pricing. The bank faces a funding challenge, with the world facing austerity measures and a predicted housing dip by the end of 2011, it believes.

Yell receives a “neutral” rating from J P Morgan which emphasises the impact of poor economic sentiment on customer confidence. It thinks this may prevent strong revenue improvement in 2011 which it sees as key, but it acknowledges that the stock is trading at good value, and expects it to rise on the first sign of good news.

Citigroup retains its “buy” rating on insurance group RSA but moves it from medium to high risk. It still sees value in the shares but thinks the stock will struggle to outperform in the near term, given it may be hard to shake-off perceptions that large-scale M&A is the focus after the failed £5bn bid for rival Aviva's non-life operations.