Stock Commentary - Europe - week to June 23, 2008

EUROPEAN: bourses, following a positive start, were all down significantly lower for the reporting week to June 23, with stocks buffeted by continuing economic - including expectations of lower corporate profits - and oil price woes, as well as the poor showing of US markets. In FRANKFURT, among the drug majors there was a 5.9% spurt for Merck KGaA, while Bayer dipped 1.3%, not helped by news of problems with its seed treatment, which has apparently caused bee deaths, causing some bee-keepers to file for damages. bioMerieux outperformed in PARIS, with a 1.8% rise, with the only significant news being its acquisition of a Swedish diagnostics firm (Marketletter June 23).

LONDON: overall share prices were lower, in a week that was dominated by punters betting on horses at the Royal Ascot Race meeting rather than stocks. The highlight was a 27.6% jump in Ireland-based Elan, which benefited from a Phase II trial with US drug major Wyeth of bapineuzumab for Alzheimer's disease. Although the drug failed to meet its endpoint in the overall study population, it demonstrated statistically-significant benefits in a sub-set. It was also helped by an upgrade from Goldman Sachs analysts. The same team added Shire to its "conviction buy" list, but retained its 1,015 pence price target, causing the stock to rise 5.7% on the last reporting day, and leaving it 3% higher on the week. SkyePharma succumbed to profit-taking, falling 13.1% after its previous week's 23.5% gain on news of US approval of a GlaxoSmithKline product, Requip XL (ropinirole), using its technology (Marketletter June 23). GSK advanced 3.2%, while fellow drug major AstraZeneca gained 3.4%.