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U.S. stock market report 0813 ET 08Oct2009-Goldman downgrades L-3 Communications to "sell" ------------------------------------------------------------------------------

Goldman Sachs on Thursday downgraded L-3 Communications Holdings Inc to "sell" and added the company to its conviction sell list in place of Northrop Grumman Corp .

The firm wrote that there were "substantial top-line headwinds" that would prevent the company from growing revenue in 2010, including the company's exposure to Iraq and to government services.

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Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0810 ET 08Oct2009-M. Stanley: Q3 will be hard for mid-cap banks ------------------------------------------------------------------------------

Morgan Stanley on Thursday said the third quarter would be hard for mid-cap banks as higher credit costs weigh on earnings, though it added that expectations for the group appeared realistic.

"Results are likely to be quite challenging for the group, with higher sequential provision expenses and net charge-offs at most banks being the biggest headwind," the firm wrote to clients.

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Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0807 ET 08Oct2009-Futures rise on Alcoa earnings, commodities ------------------------------------------------------------------------------

U.S. stock futures rallied on Thursday, a day after Alcoa Inc kicked off the latest earnings season with a surprise third-quarter profit.

Advancing commodity prices also lifted energy stocks.

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Dow Jones industrial average futures rose 75 points while S&P 500 futures gained 8.3 points and Nasdaq 100 futures were up 12.25 points.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0755 ET 08Oct2009-Deutsche Bank starts Goldman, M. Stanley at "buy" ------------------------------------------------------------------------------

Deutsche Bank started both Goldman Sachs Group Inc and Morgan Stanley as "buy" on Thursday, saying the two banks would stay well capitalized, even under likely increased regulatory capital requirements.

The firm said Goldman would generate superior earnings growth in the near term, while Morgan Stanley would see improving book value growth and return on equity over the long term.

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Morgan Stanley shares edged 0.3 percent higher to $31.24 in premarket trading, while Goldman shares closed at $190.48.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0751 ET 08Oct2009-Global M&A has worst nine-month period in six years ------------------------------------------------------------------------------

There were 6,256 announced deals valued at $1,047.7 bln globally in the first three quarters of 2009 - making it the worst Q1-Q3 period by value and volume since 2003, data from The Mergermarket Group, an M&A advisory firm, showed on Thursday.

Reuters Messaging rm://ellis.mnyandu.reuters.com@reuters.net 0730 ET 08Oct2009-PepsiCo Q3 earnings top expectations ------------------------------------------------------------------------------

PepsiCo Inc on Thursday reported third-quarter earnings that beat expectations, helped by increased sales volumes.

The soft drink company also affirmed its full-year outlook.

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Shares of Pepsi were up 0.1 percent to $61.25 in premarket trading.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net Keywords: MARKETS STOCKSNEWS

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