The broker Lehman Brothers has raised its weighting on the European brewing sector to 'neutral' from 'negative'. Its Analyst argued that the valuations are now attractive after underperforming the broader market for most of 2003.

Among the sector, Lehman Bothers upgraded Scottish & Newcastle, to 'equal-weight' from 'underweight' as the brewer continues its restructuring programme.

Lehman maintained its rating on Interbrew of overweight, but increased its target price from €27 to €29.

The broker cited the AmBev deal as justification for its move.

"We believe further positive news flow on volume growth and clarity/education on the LatAm (AmBev) transaction will bring more investors to the company," its analysts said.

But Heineken was cut to 'underweight' from 'equal-weight' due to weak growth in European markets and a lack of a 'sustained' pick-up in the US, according to the broker.