Stock Commentary - Europe - week to May 8, 2006

EUROPEAN: bourses gyrated through the reporting week to May 8. They were boosted at first by a few strong first-quarter results, followed by profit-taking and then boosted again by a strong commodity market, with most markets up overall. The strongest market was FRANKFURT, where the Xetra Dax rose 2% on the week. Merck KGaA moved 3.4% higher, still basking in its positive first-quarter results, which saw net profit leap 51% (Marketletter May 8), while Altana, down 4.0%, disappointed with its figures. Bayer was also down, 1.6% having risen earlier on strong financials, also reported last week. On the AMSTERDAM exchange, Akzo Nobel dipped 0.2% after posting a reduction in net income (Marketletter May 8), while in BRUSSELS, Solvay gained 4.6% despite news that, along with Akzo and others, it was being fined by the European Commission for running a cartel in bleaching chemicals. PARIS saw only a tiny rise of 0.3% for Sanofi-Aventis, despite the firm reporting soaring earnings (see page 3), while bioMerieux outperformed the market with a 2.0% rise.

LONDON: share prices were mixed, with drug majors AstraZeneca and GlaxoSmithKline falling 3.4% and 1.1%, respectively. The former dropped sharply after announcing that it was halting further development of its late-stage diabetes drug Galida (tesaglitazar; see page 18), thus further eroding an already weak R&D pipeline. Vernalis ended the week up 2.2% after it reported positive Phase III clinical trial data for its Frova (frovatriptan; see page 20) for the new indication of menstrual migraine and, in the USA, its American Depositary Shares leapt 18.0% to $3.51 on the news, revealed May 8.