Drug sector rebounds as airlines fall

Drug companies led a rebound in European stocks yesterday after they reached their lowest levels in almost six weeks.

AstraZeneca, Shire and GlaxoSmithKline headed for their biggest gains since February after Pfizer and Allergan ended their $160 billion merger. This means that other companies in the sector could end up as takeover targets.

DUBLIN

Ryanair

, which announced plans to open its 84th European base, at Prague, was down 3.29 per cent on a bad day for airlines generally. Its rival Easyjet posted disappointing passenger figures for March. Oil prices also rose, which traders have suggested could have a bearing on the Irish carrier’s price.

Index heavyweight, international building materials giant CRH, rose 1.69 per cent to €24.615 after one million shares changed hands in Dublin.

Another leading stock, packaging group Smurfit Kappa, was up 0.82 per cent at €22.035.

Bank of Ireland tumbled 3.14 per cent to 24.7 cent after more than 118 million of its shares were traded.

Dalata Hotel Group gained 2.23 per cent to close at €4.805.

LONDON

Pharmaceutical companies drew a lot of investors. Astra Zeneca climbed 4.47 per cent to 4,127.5p

. GlaxoSmithKline was up 3 per cent at 1,461.5p.

Irish-based Shire rose 5.16 per cent to end the day at 4,258p. Investors still believe that its proposed $32 billion purchase of Baxalta will go ahead.

Another Irish company, Tullow Oil, gained 2.78 per cent to 196.10p on the back of a boost to crude prices.

Domino's Pizza Group is heading for its biggest gain in almost two months, up 5.2 percent. Commodities group Glencore fell 1.3 per cent after selling its agriculture unit to Canada's largest pension fund for $2.5 billion.

Airlines were the biggest fallers, led lower by Easyjet. The budget airline fell 3 per cent to 1,476p after the release of its latest passenger statistics.

Aer Lingus owner International Consolidated Airlines' Group (IAG) fell 2.55 per cent to 535p.

EUROPE

The Stoxx

Europe

600 Index rose in late trade after oil extended gains following inventories data. However, analysts noted that investors still remain cautious about recovery and are unwilling to take big risks.

Barry Callebaut jumped 8.4 per cent after the Swiss chocolate maker said first-half profit fell less than analysts had predicted. Hennes and Mauritz added 5.4 per cent after reporting an increase in March sales.

Air France-KLM Group dropped 3.4 per cent after saying late Tuesday that CEO Alexandre de Juniac will step down by August 1st.

Drug-maker Sanofi climbed 3.9 per cent to €74.76 as others in the sector rose on the back of the fallout from the Pfizer-Allergan tie-in.

Shares in Fortum and Swedbank fell 12 per cent and 5.8 per cent respectively after going ex-dividend.

The recent slide took the valuation of the Stoxx 600 to 14.5 times estimated earnings, near the lowest level in more than a year relative to the Standard and Poor’s 500 Index.

While strategists predicted last month that the Stoxx 600 could rally 12 per cent more by the end of the year from Tuesday’s close, that would mark an annual gain of just 2 percent.

US The collapse of the $160 billion merger of Pfizer and Allergan bolstered the healthcare sector on rising hopes that the pharmaceutical giants could turn to smaller targets.

Pfizer shares rose 3.9 per cent to $32.57 and gave the biggest boost to the S&P 500, while Allergan was up 3.6 per cent at $245.05.

Crude jumped nearly 5 per cent after data showed an unexpected draw in US crude stockpiles last week. – (Additional reporting: Bloomberg, Reuters)