MOST NOTEWORTHY: European banks, the Paper and Forest Products sector, Kindred Healthcare and Convergys were today's noteworthy upgrades:

• Keefe Bruyette upgraded the European Banks sector to Neutral from Underweight on valuation as they see limited downside from current levels. Included in the firm's top picks are HSBC Holdings Plc (NYSE: HBC) and Banco Santander SA (NYSE: STD).
• Credit Suisse upgraded the Paper and Forest Products sector to Overweight from Underweight citing valuations and expectations that fundamentals will bottom this fall. The firm raised shares of Temple-Inland Inc (NYSE: TIN) and Smurfit-Stone Container Corporation (NASDAQ: SSCC) to Outperform from Neutral.
• Friedman Billings upgraded shares of Kindred Healthcare Inc (NYSE: KND) to Outperform from Market Perform on valuation following the recent pullback and believes the company is well-positioned to beat modest expectations over the remainder of the year. The firm raised their target to $36 from $29.
• Oppenheimer raised Convergys Corporation (NYSE: CVG) to Outperform from Perform on valuation, as they believe investors should look at the company's business lines separately. Their sum of parts valuation yields an $18 target.

OTHER UPGRADES:

• Suncor Energy Inc (NYSE: SU) was upgraded to Overweight from Neutral at JP Morgan and to Outperform from Market Perform at Friedman Billings.
• UBS upgraded BT Group Plc (NYSE: BT) to Neutral from Sell.
• Broadcom Corporation (NASDAQ: BRCM) was upgraded to Buy from Neutral at Piper.

MOST NOTEWORTHY: European banks, Voltaire, Perfect World and Aspreva Pharmaceuticals were today's noteworthy initiations:

• Morgan Stanley assumed coverage of Credit Suisse Group (NYSE: CS) with an Overweight rating, Deutsche Bank AG (NYSE: DB) with an Equal Weight rating and UBS AG (NYSE: UBS) with an Underweight rating.
• Voltaire Ltd (NASDAQ: VOLT) was started with a Buy rating and $29 target at Goldman Sachs, with a Neutral rating at JP Morgan, with an Overweight rating and $12 target at Thomas Weisel and with an Outperform rating and $15 target at RBC Capital. Thomas Weisel said the market gives Voltaire very little credit for its strong position in the rapidly growing Infiniband switch market and RBC Capital believes the stock has impressive growth and gross margin momentum.
  
• Perfect World Co Ltd (NASDAQ: PWRD) was initiated with a Positive rating at Susquehanna, as the firm is positive on its growth potential in the online gaming industry in China.
• Aspreva Pharmaceuticals Corporation (NASDAQ: ASPV) was initiated with a Sector Perform at RBC Capital, as the firm believes the current valuation is not attractive, and recommends $17 as an attractive entry point. The firm set a target of $22 on the shares.

OTHER INITIATIONS:

• Drugstore.com Inc (NASDAQ: DSCM) was started with a Market Perform rating at JMP Securities.
• Wachovia started shares of BladeLogic Inc (NASDAQ: BLOG) with an Outperform rating and $17 target. The stock was also initiated at Morgan Stanley with an Equal Weight rating and at Citigroup with a Hold rating and $27.50 target.
• Lehman initiated Spirit AeroSystems Holdings Inc (NYSE: SPR) with an Overweight rating and $43 target.
• Goldman Sachs started shares of Marsh & McLennan Companies Inc (NYSE: MMC) with a Sell rating and $25 target.

"The silver lining in all the recent gloom is that credit market shakeout is basically a healthy development," says global expert John Christy in his Forbes International Investment Report.

Here, the advisor looks at the state of the market, the credit market problems and the re-pricing of risk as well as several leading European banks that he believes offer strong fundamental value for long-term investors. He notes, "While there's no question that European financial firms will feel a certain degree of pain, a lot of the bad news appears to be priced in at this point."

One favorite is ING ((NYSE: ING). He states, "The bank saw earnings rise 27% in the second quarter, and the Dutch bank-insurer's exposure to the sub-prime mess is negligible. ING looks extremely cheap at 8 times earnings. It also pays a 4.4% dividend yield."

Meanwhile, he notes that Deutsche Bank (NYSE: DB) is now trading at 7 times earnings and paying a 5% dividend yield. Allied Irish Banks (NYSE: AIB) is also sporting single-digit price-to-earnings multiples, he states. But, he says, "The long-term fundamentals for DB, ING and AIB haven't changed all that much - if at all - and this looks like a good buying opportunity for all three."

Christy is also bullish on UBS (NYSE: UBS) is the biggest bank in Switzerland and the world's largest money manager with $2.6 trillion of invested assets. He notes that while the firm can trace its roots as far back as the 18th century, its "real transformation" came in 2000 when UBS bought PaineWebber. He explains, "The merger gave UBS a major presence in the U.S. and helped lay the framework for a truly global institution."

Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.