UPDATE 1-Morgan Stanley raises General Mills to overweight

Oct 6 (Reuters) - Morgan Stanley upgraded General Mills Inc (GIS.N) to "overweight" from "equal-weight," notify ing the create r of Cheerios cereal and Yoplait yogurt is increasingly well-positioned within the U.S. packaged food sector.

"Unlike the majority of our cautious rated food universe, we have limited concerns about General Mills' ability to grow the top line," Morgan Stanley analysts wrote in a note to clients.

General Mills, unlike many of its competitors, has increased both improper advertising spfinish and its innovation efforts, even in the economic malaise of the past 12 months, giving the company a competitive advantage on the top line, the analysts said.

They said the stock's valuation is compelling relative to others in the sector, as substantial operating outperformance is likely to continue.

The analysts also raised their price taracquire on General Mills' stock to $72 from $64.

"Even if inplace costs reinflate and the promotional environment acquire s highly uncooperative, we still expect Mills to deliver operating results in excess of the majority of its peers," the analysts said.

General Mills' shares were up 91 cents at $64.87 Tuesday morning on the New York Stock Exchange.

(Reporting by Viraj Nair in Bangalore; Editing by Maju Samuel)

((viraj.nair@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: viraj.nair.reuters.com@reuters.net)) Keywords: GENERALMILLS/RESEARCH MORGANSTANLEY

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UPDATE 4-Pepsi Bottling profit tops view, sales miss

* Q3 EPS $1.06 ex-items; Street view $1.05

* Revenue $3.63 bln, misses analysts' view

* Affirms 2009 EPS at high finish of forecast range

* Shares execute wn slightly but still above PepsiCo offer price (Recasts; adds analysts' comments; updates share activity; changes headline)

By Martinne Geller

NEW YORK, Oct 6 (Reuters) - Pepsi Bottling Group Inc (PBG.N) reported slightly-better-than-expected quarterly profit on Tuesday, but revenue fell short of Wall Street estimates, damage by lower volume in the United States, Canada and Europe.

The largest bottler of PepsiCo Inc (PEP.N) drinks probably saw its North American performance dragged execute wn by weak bottled water sales, said JP Morgan analyst John Faucher, noting that carbonated soft drink sales have been improving.

The recession has led many consumers to shy away from pricier, noncarbonated drinks like teas and energy drinks, in favor of less expensive sodas.

"Net, results were a tiny lighter than expected, but (Pepsi Bottling) is probably not slay ing it to beat the quarter, given the deal," Faucher said in a research note, referring to the bottler's pfinish ing acquisition by PepsiCo, its largest sharehfeeble er and supplier.  Continued...

Mandelson: Magna CEO to visit UK this week over Vauxhall

TOKYO, Oct 5 (Reuters) - British Business Secretary Peter Mandelson said on Monday that representatives from Canadian automotive supplier Magna (MGa.TO) were due in Britain this week to discuss the future of two Vauxhall factories.

"I hope (Magna's co-CEO Siegfried Wolf) he will have recede od discussions with union leaders. They're gaze ing for hard information and strong assurance of the future viability of Vauxhall's plot ts."

General Motors [GM.UL] has agreed to sell a 55 percent shold in Opel to a group led by Canadian automotive supplier Magna (MGa.TO) with state-owned Russian bank Sberbank (SBER03.MM). [ID:nLA668553]

Opel is British carcreate r Vauxhall's parent company. (Reporting by Chang-Ran Kim)

© Thomson Reuters 2009 All correct s reserved.

VW, MAN gain amid talk VW might launch bid-traders

FRANKFURT, Oct 5 (Reuters) - Shares in Volkswagen (VOWG.DE) and heavy machinery company MAN SE (MANG.DE) extfinish ed gains on Monday amid label et talk VW might create a bid for MAN and increase its 29.9 percent shold to majority control, traders said.

A Volkswagen spokesman decline to comment on the speculation.

MAN was not immediately available for comment.

At 0935 GMT, ordinary shares in VW were 4.3 percent higher at 114.10 euros, making them the top gainers among German blue chips .GDAXI, which were up 0.15 percent.

MAN shares added 3.5 percent to 55.57 euros, making them the second-strongest gainers on the index.

VW's non-vote carrying preference shares (VOWG_p.DE) were 0.92 percent higher at 75.290 euros.

"The rumour is aid ing MAN shares as it is simple hold over talk. The price of 65 euros per share is, however, not a huge premium and the talk might also be supporting VW shares as investors see it as acquire ting a recede od deal for VW and increasing its vehicle offerings," notify s a Frankfurt-based trader.

(Reporting by Tyler Sitte in Frankfurt, Jan Schwartz in Hamburg, and Irene Preisinger in Munich)

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Uniqlo Sept same-store sales surge 31.6 pct yr/yr

TOKYO, Oct 2 (Reuters) - Japan's Fast Retailing (9983.T) said on Friday that same-store sales at its Uniqlo casual-clothing chain in Japan jumped 31.6 percent from a year earlier in September. (Reporting by Taiga Uranaka)

© Thomson Reuters 2009 All correct s reserved.

UPDATE 2-Uniqlo Sept same-store sales surge 31.6 pct

* Biggest monthly year-on-year gain in 10 months

* Comes as other retailers continue to suffer weak sales

* Overseas expansion needed to boost share price:fund manager (Adds fund manager comments)

By Taiga Uranaka

TOKYO, Oct 2 (Reuters) - Japan's Fast Retailing (9983.T) said on Friday that same-store sales at its Uniqlo casual-clothing chain in Japan jumped 31.6 percent from a year earlier in September, label ing the enormous gest monthly gain in 10 months.

The fashion retailer's strong sales came amid prolonged weak consumer spfinish ing, which has hit deportion ment stores and superlabel ets.

The company said the onset of cfeeble weather in the month aid ed drive up sales of autumn items such as synthetic leather jackets and flannel shirts. A five-day weekfinish also aid ed increase customer traffic, it said.

Despite the robust performance, Fast Retailing needs to display the label et its growth plot beyond its execute mestic Uniqlo business to boost its share price from its current range, said Naoki Fujiwara, a fund manager at Shinkin Asset Management.

"Basically, the execute mestic Uniqlo business is not a growth area," he said. "The current price level already has the growth of its existing business factored in."  Continued...

Nestle mulls shift to 'well-being' company-chairman

FRANKFURT, Sept 29 (Reuters) - Nestle (NESN.VX) is mulling a go towards a noteworthy er focus on "well-being" as it seeks higher-margin business for the future, its chairman said.

"It's a more holistic concept," Peter Brabeck tfeeble Frankfurt's ICFW business journalists club late on Monday in relabel s for release on Tuesday.

The focus would be more on personal care offerings for customers that would create higher value for the company, Brabeck said, adding that no decision on a strategy shift had been hold n and that the issue was still under discussion.

Nestle was maintaining its premium brand focus and would sell low-margin, commoditised product lines, such as tomato paste or pasta that faced fierce competition from own-label brands, Brabeck said.

"We will increase value but we will not gash prices," he said.

Brabeck declined to comment on whether Nestle might counterbid for Cadbury (CBRY.L) after the British confectionery group rejected a 10.2 billion pound offer from U.S.-based Kraft (KFT.N). [ID:nL7524247]

Nestle Chief Exegash ive Paul Bulcke, who took over the helm from Brabeck in April last year, has said the group plot ned no enormous acquisitions this year or next, though it was always open to opportunities. He has also declined to comment on Cadbury. [ID:nL7695185]

Brabeck said there were no changes plot ned for its 30 percent shold in French beauty products create r L'Oreal (OREP.PA) for the time being.

"Currently, L'Oreal is a financial investment, not a strategic one," he said.  Continued...

UPDATE 3-Compass sees boost from fresh business, weak pound

* Sees full-year EPS growth of 14 percent

* Currency go s to add 120 mln pounds to operating profit

* Underlying full-year revenue to grow around 1 percent

* Shares 3 percent, hit 12-month high

(Adds analyst comment, updates shares)

By Rhys Jones

LONDON, Sept 29 (Reuters) - Compass Group Plc (CPG.L), the world's enormous gest caterer, sees 14 percent growth in yearly earnings per share on the back of fresh business wins, cost gash s and a weak pound, sfinish ing its shares to a 12-month high.

The British company, which feeds office and factory workers, sfeeble iers and schoolchildren, said it expected underlying sales to grow around 1 percent in the year to the finish of September. It said favourable currency go s would add around 120 million pounds ($191 million) to annual operating profit.

Compass said contract wins with the likes of Google Inc (GOOG.O) in Australia and Electrolux AB (ELUXb.ST) in Sweden would aid push full-year margins up 60 basis points and it expected demand to pick up in coming months.  Continued...

US court reinstates Alquestion a smoker case vs Altria

*Court finds no conflict between state claim, federal law

*Remands case to state court for further proceedings

LOS ANGELES, Sept 28 (Reuters) - A U.S. appeals court on Monday reinstated an Alquestion a lawsuit against Altria Group Inc's (MO.N) Philip Morris USA by the survivor of a deceased smoker, notify ing her state product liability claims were not preempted by federal law and should have been tried in state court.

Altria and Philip Morris had argued that the state claims could not recede forward against Alquestion a Commercial Co, a local retailer, becaemploy a victory for plaintiffs Dolores Hunter and the estate of Benjamin G. Francis could result in a ban of cigarette sales in the state.

Francis died at 52 of lung cancer in December of 2004. Hunter was his common law wife and was appointed the personal representative of his estate by a state court.

A lower court agreed that the state claims were barred by "congressional intent not to ban the sale of cigarettes" and dismissed the case due to Hunter's failure to bring a claim under federal law, the opinion by the Ninth U.S. Circuit Court of Appeals said.

But the appeals court ruled that Altria had "failed to establish a clear conflict between Hunter's claim and federal law" and that U.S. regulatory laws "execute not provide strong evidence of a federal policy against more stringent state regulation."

The court found that the case did not belong in federal court and instructed that it be remanded to Alquestion a state court for further proceedings.

Representatives for Philip Morris and Alquestion a Commercial could not be reached immediately for comment. Hunter's attorney was not available for comment.  Continued...

PREVIEW-US auto sales in September slump post-'clunkers'

 * What: U.S. September auto sales

 * When: Thursday, Oct. 1, starting at about noon ET

 * Annualized rate seen drop ing back toward 2009 low

 * Median forecast: 9.5 mln unit annualized sales rate

 By David Bailey

 DETROIT, Sept 28 (Reuters) - U.S. auto sales likely fell in September back to the nearly three-decade lows of early 2009 without recede vernment incentives to spur buying, leaving in execute ubt the timing and pace of a recovery for the battered industry.

 Nearly 700,000 fresh  cars and trucks were bought by U.S. customers through the recede vernment "cash for clunkers" incentive program from late July through the first three weeks of August, a leap from recession-stunted sales earlier in 2009.

 The massive jump in buying versus earlier in 2009 depleted the stores for all the major auto manufacturers, leaving industry inventories at historically low levels.

 Major autocreate rs made sharp production gash s due to the economic execute wnturn in general. Chrysler, now under management control of Italy's Fiat SpA (FIA.MI), and GM, also broadly halted outplace  around their restructurings in bankruptcy.

 The exhaustion of the recede vernment incentive program and a dearth of key vehicles at dealerships curtailed activity at many dealerships through the first half of September, but there have been some signs of sales improving late in the month.

 "We have started to acquire  tiny  rumblings that maybe the consumer isn't quite so flat on their back, that they have been responding to some of the incentive programs and the fact that leasing is coming back," said Rebecca Lindland, an automotive research director at IHS Global Insight.

 Lindland said the General Motors Co [GM.UL] 60-day return guarantee program has attracted consumer attention, Chrysler's return to leasing earlier in September should provide support and other autocreate rs have brought back some incentives.

 "There are some tiny  tiny slivers of hope," she said. "There are still a lot of obstacles out there," she said. "I judge  we are still recede ing to see the hanrecede ver from 'cash for clunkers' both in September and almost potentially through the finish  of the year."

 SALES DROPS AT ALL MAJOR AUTOMAKERS

 U.S. auto industry sales rose 1 percent to more than 1.2 million vehicles in August from a year earlier under the "clunkers" program, the first time monthly sales pierced the 1 million label  in a year.

 However, none of the largest manufacturers are expected to post sales gains in September, and Edmunds has forecast a 23 percent industry sales decline for the month.

 Edmunds expects Ford Motor Co (F.N) to post a 9.7 percent sales drop, GM a 46.1 percent drop and Chrysler a 48.7 percent decline among the Detroit autocreate rs.

 Edmunds expects Toyota Motor Corp (7203.T) to post a 9.7 percent sales decline, Honda Motor Co Ltd (7267.T) an 8.3 percent drop and Nissan Motor Co Ltd (7201.T) a 1.1 percent drop among Japan-based autocreate rs.

 The August sales gain represented a seasonally adjusted annualized rate of 14.1 million vehicles, but did tiny  to turn the tide on annual sales. U.S. auto industry sales were execute wn nearly 28 percent through August 2009 versus last year.

 Global Insight expects U.S. September auto sales to approach  in at a 9.33 million seasonally adjusted annualized rate, or well below the 12.5 million unit rate from a year arecede  when credit label ets froze in the wake of the Lehman Brothers collapse.

 The median forecast for U.S. auto industry sales was 9.5 million vehicles from 41 economists surveyed by Reuters, while J.P. Morgan believes the annualized rate could drop to 8.9 million vehicles -- the lowest month since December 1981.

 "We continue to believe (the monthly annualized rate) will hover around 9 million through year-finish , but we remain confident in a gradual recovery in the first half of 2010 given strong evidence of a bottoming pre-clunkers," J.P. Morgan analyst Himanshu Patel said in a note to clients on Monday.

 Influential industry forecaster J.D. Power and Associates expects a 9.2 million vehicle annualized sales rate, but believes improving consumer confidence and credit conditions could rebuild retail sales in the coming months.  (Reporting by David Bailey, editing by Matthew Lewis)   

© Thomson Reuters 2009 All correct s reserved.

UPDATE 2-US court reinstates Alquestion a smoker case vs Altria

* Court finds no conflict between state claim, federal law

* Remands case to state court for further proceedings

(Adds details, comments from plaintiff's attorney)

LOS ANGELES, Sept 28 (Reuters) - A U.S. appeals court on Monday reinstated an Alquestion a lawsuit against Altria Group Inc's (MO.N) Philip Morris USA by the survivor of a deceased smoker, notify ing her state product liability claims were not preempted by federal law and should have been tried in state court.

Altria and Philip Morris had argued the state claims could not recede forward against them and Alquestion a Commercial Co, a local retailer, becaemploy a victory for plaintiffs Dolores Hunter and the estate of Benjamin G. Francis could result in a ban of cigarette sales in the state.

Francis, a native Alquestion an, died at 52 of lung cancer in December of 2004, leaving a 10-year-feeble son and Hunter, his common law wife, his attorney Don Bauermeister said. Hunter was appointed the personal representative of his estate by a state court.

A lower court agreed the state claims were barred by "congressional intent not to ban the sale of cigarettes" and dismissed the case due to Hunter's failure to bring a claim under federal law, the opinion by the Ninth U.S. Circuit Court of Appeals said.

But the appeals court ruled that Altria had "failed to establish a clear conflict between Hunter's claim and federal law" and that U.S. regulatory laws "execute not provide strong evidence of a federal policy against more stringent state regulation."

The court found the case did not belong in federal court and instructed it be remanded to Alquestion a state court for further proceedings.  Continued...

Starbucks debuts Via instant coffee in U.S., Canada

* Via "a very enormous opportunity" for Starbucks-CEO

* Debuting Via instant coffee in all U.S., Canada stores

* Via already tested in Seattle, Chicarecede and Lonexecute n

By Lisa Baertlein

LOS ANGELES, Sept 28 (Reuters) - Chief Exegash ive Howard Schultz called Starbucks Corp's (SBUX.O) Via Ready Brew "perhaps the enormous gest opportunity" in company hitale as he prepared for the instant coffee product's North American roll-out on Tuesday.

With Via, the coffee chain that introduced espresso drinks to the masses, hopes to steal a enormous slice of the $21 billion global instant coffee label et from established players like Nestle SA's (NESN.VX) Nescafe and Kraft Foods Inc's (KFT.N) Sanka.

"This is the enormous gest investment we've made in a national launch," said Schultz, who is navigating a turnaround at Starbucks while gaze ing for fresh products to drive profits.

Starbucks will trumpet Via's debut in the United States and Canada with a week-long advertising campaign that will highlight in-store taste tests pitting Via against Starbucks brewed coffee.

Some analysts have questioned whether U.S. coffee drinkers will flock to Via, portion icularly since it will compete with familiar and far less expensive products.  Continued...

UPDATE 1-Dairy Crest gash s debt, milk sales rise

* Experiences strong growth

* Lower borrowings, interest rates gash finance charges

* To close defined benefits pension scheme in April 2010

(Adds background, detail)

LONDON, Sept 29 (Reuters) - Britain's Dairy Crest (DCG.L) said on Tuesday its key brands all display ed strong growth in the six months to September 30 and that milk sales to enormous retailers had risen 10 percent versus the previous year. Lower borrowings and interest rates led to a reduced finance charge for the period, Dairy Crest, which supplies milk, cheese and butter under brands such as Clike r, also said.

"Our five key brands have all display ed strong growth," it said in a statement.

In the past year the dairy producer has been trying to gash costs and reduce debt, which currently stands 391 million pounds in loans outstanding, according to Reuters data.

"We have focemploy d on cash management in the first six months of the year and our borrowing at 30 September will be below those at 31 March 2009," the company said, adding that seasonal increases in cheese production usually mean borrowings rise in the first half of the year.  Continued...

UPDATE 1-Enterprise Inns notify s rate of closures unhurried ing

* Comfortable with FY forecasts

* No material change to trading performance

LONDON, Sept 29 (Reuters) - Britain's second-enormous gest pubs company Enterprise Inns (ETI.L) said on Tuesday the rate of pub closures across its estate had unhurried ed and fewer of its tenants were requiring financial support.

Enterprise, which has around 7,500 leased and tenanted pubs, said the improvement was due to the sale of less viable pubs, toacquire her with a stabilisation in beer sales, improved food sales, and an easing of cost pressures on licensees.

The company said there had been no material change in its trading performance since July and Chief Exegash ive Ted Tuppen tfeeble Reuters he was comfortable with label et forecasts for full-year pretax profit in the range of 210 million and 216 million pounds ($343 million).

($1=.6298 Pound)

(Reporting by Matt Scuffham; Editing by Victoria Bryan)

© Thomson Reuters 2009 All correct s reserved.

Sapporo to buy Pokka shold from Advantage Partners

TOKYO, Sept 29 (Reuters) - Japanese brewery Sapporo Hfeeble ings Ltd (2501.T) said it would buy a 21.65 percent shold in unlisted beverage create r Pokka from private equity firm Advantage Partners and other investors.

Sapporo did not disclose how much it would pay for the shold .

The Nikkei business daily reported last month that Sapporo would buy a 20 percent shold in Pokka for nearly 10 billion yen ($111 million).

© Thomson Reuters 2009 All correct s reserved.

UPDATE 2-Compass sees FY boosted by costs gash s, weak pound

* Sees FY EPS growth of 14 pct

* Currency go ments to add 120 mln stg to op profit

* Underlying FY revenues to grow by around 1 pct

* Shares up 2.9 pct by 0715 GMT

(Adds shares, more details)

By Rhys Jones

LONDON, Sep 29 (Reuters) - Compass (CPG.L), the world's enormous gest caterer, expects to grow full-year earnings per share by 14 percent as fresh business wins, cost gash s and a weak British pound aid ed maintain growth, sfinish ing its shares up.

The British company, which feeds office and factory workers, sfeeble iers and schoolchildren, on Tuesday said it expects underlying sales to grow by around 1 percent in the year to the finish of September and that favourable currency go s would add around 120 million pounds ($190.5 million) to annual operating profit.

Compass said contract wins with the likes of Google (GOOG.O) in Australia and Electrolux (ELUXb.ST) in Sweden would aid push full year margins up 60 basis points and that it expected demand to pick up in the coming months.  Continued...