Stock Commentary - Europe - week to Sept 29, 2008

EUROPEAN: bourses saw their most volatile performances in the reporting week to September 29, impacted not just by the US financial crisis, but also difficulties in their own backyards. Markets fell to their lowest levels since January 2005 on the last day, as the anticipated US government bail-out for toxic mortgages failed to gain Congressional support. The main indexes in AMSTERDAM and BRUSSELS fared worst, plunging 13.8% and 12.7%, respectively, over the week. The pharmaceutical sector failed to provide a defensive home for investors, although ZURICH saw a small 1.2% rise for Novartis, which benefited from an upgrade to neutral from underperform - with a share price target of 60 Swiss francs by analysts at Credit Suisse, seeing its shares jump as much as 3% on September 23. There was a 7.9% gain for Speedel, after Novartis announced that a "squeeze out" procedure will now be started to cancel remaining shares under the same terms of the public tender offer of 130 francs per share for the company Marketletter August 11. In FRANKFURT, drug majors Bayer and Merck & Co managed to outperform the market, falling just 3.7% and 3.8% respectively against a 4.9% decline in the Xetra Dax. Stada Arzneimittel plunged 11.3%, coming down from recent highs on rumors of a potential takeover offer from Israel's Teva Pharmaceutical Industries. In PARIS, there was a 1.9% fall in Sanofi-Aventis stock, though still better than the market, with the stock not helped by a Credit Suisse downgrade. LONDON drug stocks put in a poor showing, with only little Sinclair Pharma seeing a rise (+1.5%) ahead of financial results. Drug majors AstraZeneca and GlaxoSmithKline dipped, despite seeing some defensive buying.