Stock Commentary - Europe - week to May 4, 2009

6 May 2009

EUROPEAN: bourses started in negative mood, largely on profit-taking, but then moved higher ahead of the May 1 holiday and again on the last  reporting day, May 4, buoyed by a recovery in bank and financial issues.  PARIS saw a strong performance from Ipsen, which was boosted by the  news of US Food and Drug Administration approval of Dysport, a  botulinum toxin to treat cervical dystonia and wrinkles (see page 28),  as well as gaining after the firm reported good first-quarter results  (page 6), leaving the stock 8.5% higher. Sanofi-Aventis outperformed the  CAC 40, rising 5%, also after posting results that were ahead of  consensus estimates (Marketletter May 4) and getting an upgrade from  JP Morgan analysts. There was a negative reaction in FRANKFURT to  financials reported last week by Bayer, which dipped 1.5%, while fellow  German drug major Merck KGaA eased 0.4%. None of the drug stocks  outperformed, with the best showing, a 4.2% rise, coming from Evotec, on  no particular news.

LONDON: share prices rose more modestly than the rest of Europe, with  markets closed for a holiday on May 4, and the FTSE 100 up just 1.8%.  There was a startling 39.2% leap for little Vernalis, after the biotech  firm announced a placing and open offer of new ordinary shares  (Marketletter May 4). AstraZeneca was down a sharp 6.4%, although it  reported first-quarter figures that beat consensus forecasts (see  page 5). GlaxoSmithKline saw a 3% dip, on evidence that drug stocks  were not benefiting as defensive plays in rising markets. Shire was 6.2%  lower, despite hitting the headlines on speculation that it might  dispose of its attention-deficit hyperactivity disorder drug franchise.

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