THE recovery of Marks & Spencer was tipped to continue yesterday after one leading City firm added £500m to the retailer's potential valuation.

Morgan Stanley set a target share price of 510p for the stock as it forecast improved sales in womenswear and lingerie.

That would make M&S worth £8.47bn - £500m more than Friday's closing price of 479p valued it at, and a massive premium on the 400p a share that Bhs owner Philip Green was willing to pay last year.

Morgan Stanley's upgrade for M&S came as the broker predicted weaker like-for-like sales at Next and downgraded the rival retailer.

M&S shares have climbed nearly 30 per cent in the past three months as investors welcomed half-year profits of £308.2m, up 19.6 per cent following the first increase in quarterly turnover for two years.

The company will give an update on the third quarter in January.