Stock Commentary - Europe - week to March 17, 2008

EUROPEAN: bourses started the reporting week to March 17 in good form, rebounding from the dismal previous period on the US Federal Reserve Bank's $200.0 billion plan to restore liquidity in the financial sector, with some bargain-hunting in evidence. However, by March 13, sentiment started to change, as investors lost their appetite and, following the news of the collapse of Bear Sterns over the weekend, European markets nose-dived on the last reporting day when, oddly, the Dow Jones stabilized for a small gain. Drug stocks failed to be seen as defensive, despite some gains. In FRANKFURT, there was a rebound of 5.6% for Bayer after the previous week's negative patent news, while MorphoSys continued to decline, falling a further 7.4% despite reporting better financials. ZURICH saw Roche and Novartis underperform, with 4.7% and 4.6% drops, respectively. Sanofi-Aventis significantly underperformed on the PARIS bourse, falling 5.2%, on no specific news, while bioMerieux gained 2.4%, despite posting lower 2007 profits, due to costs associated with the closing of its Boxtel, Netherlands, site.

LONDON: saw the most activity in the pharmaceutical sector, with Shire rising as high as L10.35 before settling 4.7% higher at L9.98 ahead of the weekend. The activity was sparked by rumors that US giant Pfizer was looking at the firm as a takeover candidate, (see page 2) with a possible bid of L13.00 a share. Then, on March 17, when the FTSE 100 plunged 3.9%, UK drug major AstraZeneca was mooted as a potential buyer, edging Shire's stock slightly higher in a very downturned market. AstraZeneca fell 2.4% and was down 4.0% week-on-week.