Stock Commentary - Europe - week to Nov 26, 2007

EUROPEAN: bourses began the reporting week to November 26 on a rebound, helped by a strong start on Wall Street, but the rest of the period was volatile, not helped by the advance of the euro against the US dollar and continued concerns about the subprime credit market. With the USA's Thanksgiving holiday leaving a gap on November 22, investors moved into defensive stocks, with pharmaceutical issues coming to the fore over two days, helped by a positive rating on the "big-cap" sector from analysts at Deutsche Bank. In ZURICH, both Roche and Novartis benefited, rising 5% and 8% that day, closing the week up 7.4% and 5.8%, respectively. Analysts at Lehman Brothers also boosted Roche, saying the firm is best positioned in a tough regulatory environment, which 2007 has been, especially in the USA, and is expected to continue next year. Sanofi-Aventis saw similar action, advancing 4.4% for a week-on-week gain of 4.0% on the PARIS stock exchange. In FRANKFURT, Bayer was lifted by a positive recommendation from Merrill Lynch, closing the week 5.3% higher but beaten by Stada Arzneimittel and Evotec, which rose 8.4% and 7.5%, respectively, helped by well-received financial results (Marketletter November 26 and page 6 this issue).

LONDON: saw pharmaceutical majors AstraZeneca and GlaxoSmithKline benefit from the positive sentiment toward drug stocks, rising 3.7% and 5.0%, respectively. Analysts at Citigroup upped their rating on the sector, the worst-performing in Europe for two years, to neutral. Acambis jumped 11.7%, following the firm's announcement that its business plan remains on track and an over-weight rating on the stock from Lehman (see page 4).