Stock Commentary - Europe - week to Nov 6, 2006

EUROPEAN: bourses put in a mixed performance at the start of the reporting period to November 6, but hardened up ahead of the weekend and spurted forward on the last day, fuelled by good third-quarter financial results reports and takeover rumors. The FTSE Eurofirst gained 1.1% that day. In PARIS, Sanofi-Aventis bounced back from its previous week's 3.0% fall, rising 2.9% on the week, on disappointing third-quarter figures (Marketletter November 6). However, analysts at Lehman Brothers have an overweight rating on the stock. FRANKFURT saw a good showing from Bayer, which gained 2.9% after its R&D meeting (Marketletter November 6). Altana increased 2.4% after posting an 11% rise in its pharmaceutical sales, beating analysts' expectations (see page 5), while Merck KGaA was down 2.9%, despite presenting positive new clinical trial results for Erbitux (cetuximab; see page 20). In ZURICH, Zuercher Kantonalbank has cut Actelion, up 7%, to marketweight from overweight, after the stock neared the target price of 222 Swiss francs.

LONDON: share prices meandered for the first four days but ended up strongly, with the FTSE 100 up 1.6% on the week. Drug majors AstraZeneca and GlaxoSmithKline returned to favor, having disappointed the market the previous week with their results (Marketletter November 6), rising 2.1% and 1.1%, respectively. GSK was also the subject of a takeover/merger rumor with Switzerland's Novartis, but an upgrade from analysts at JP Morgan was probably the reason for its hike. AstraZeneca's appointment of a new chief medical officer was also viewed favorably (see page 28), as it was interpreted as indicating positive new data for Crestor (rosuvastatin).