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Market overview: Aviva higher on broker commentary

LONDON (ShareCast) - 1226: As the cost savings from the Friends Life transaction begin to filter through and the dividend rises there is scope for shares in life insurer Aviva (Other OTC: AIVAF - news) to re-rate, analysts at Morgan Stanley (Xetra: 885836 - news) write today. "Given the significant 21% underperformance of Aviva shares versus the SXIP since the announcement of the Friends transaction, we see significant scope for a re-rating. On simple earnings metrics, Aviva is trading at a material discount to key European peers (such as AXA (Paris: FR0000120628 - news) and Allianz), with the gap to UK life names such as L&G (LSE: LGEN.L - news) especially wide." The broker has kept its overweight recommendation but raised its target price on the stock to 633p. JP Morgan Cazenove has reinstated its overweight recommendation and 622p target.

1140: Analysts at Barclays (LSE: BARC.L - news) , JP Morgan and Morgan Stanley have all reportedly weighed in with positive recommendations on Aviva following the closure of its purchase of Friends Life. FTSE 100 down 31 points to 7,058.60.

1048: UBS (NYSEArca: FBGX - news) has also lowered its iron ore price forecast by 20-30% to $48-55 a tonne at 62% Fe for 2015-2019. It has also slashed its long-term estimate (beyond 2020) by 27% to $55, which is said is the price needed to balance seaborne supply and demand, "given ongoing cost deflation, producer FX tailwinds, loss tolerance and closure costs". As part of its revisions, UBS has downgraded iron ore producer Ferrexpo (LSE: FXPO.L - news) from 'neutral' to 'sell', saying it now expects iron ore to suffer a "super down cycle".

1029: In a note entitled "It's the end of the Iron Age" analysts at Citi have lowered their price targets on the shares of 19 mining companies (Centamin Egypt and Vedanta are the exceptions) following a downward revision to their iron ore price forecasts for this year and next. The broker now sees the metal trading at an average price of $45/tonne in 2015 and $40/tonne next year. Hence, their view on the mining and metal space falls to 'neutral'. "Under this backdrop we believe the upside in the sector is now capped, however the downside is being protected by dividend yield." FTSE 100 down 22 points to 7,067.57. 0900: The Footsie has begun the morning on a dour note on the heels of weaker than expected Chinese trade data and a downbeat research note from Citi on the mining sector. Fresnillo (Other OTC: FNLPF - news) is one of the few exceptions in the mining sector after Bank of America (Swiss: BAC.SW - news) upgraded the stock to a 'buy'. The same broker however has downgraded its recommendation on shares of Barratt Developments (LSE: BDEV.L - news) to an 'underperform' from 'neutral'. Chinese exports dropped by 14.6% year-on-year in March, well below the increase of 8.2% which analysts had pencilled in. Nevertheless, analysts at Unicredit (Milan: UCG.MI - news) and others are pointing to the fact that they rose by 48.9% in the prior month. FTSE 100 down 15 points to 7,075.50.