By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. equities advanced Tuesday, with
AstraZeneca PLC gaining on speculation the British drug maker will
receive a takeover bid, while GlaxoSmithKline PLC shares rose as
the pharmaceutical heavyweight made a couple of its own deals.
U.K.'s FTSE 100 index leapt 0.9% to 6,681.76, the highest
closing level since April 4, according to data from FactSet,
following a four-day break in trading in observance of the Easter
holiday. Last week, the index finished the holiday-shortened week
up by 1.1%.
The FTSE on Tuesday broke above "several resistance levels"
including the 6,680 mark, paving the way for the benchmark index to
retest an April peak of around 6,705, said Fawad Razaqzada,
technical analyst at Forex.com, in a note.
AstraZeneca (AZN) helped pace the FTSE 100's gain as its own
shares rose 4.7% -- the strongest rise since August 2011, according
to FactSet data -- after a Sunday Times report that Pfizer Inc.
(PFE) , the largest drug maker in the U.S., had approached
AstraZeneca about a possible GBP60 billion ($100.78 billion)
merger. Separately, the Daily Telegraph reported that AstraZeneca
has hired Goldman Sachs and Morgan Stanley to advise it if Pfizer
(PFE) were to again attempt to talk with the company about a
takeover bid.
An overlap with cholesterol-lowering medications Lipitor from
Pfizer and AstraZeneca's Crestor, "could perhaps cause some [U.S.
Federal Trade Commission] concerns but wouldn't be prohibitive,"
wrote European research analysts at Credit Suisse in a Tuesday
note.
Meanwhile, shares of GlaxoSmithKline (GSK) tacked on 5.2%
following plans by Novartis AG to buy Glaxo's oncology unit for
about $14.5 billion, while Novartis sells its vaccines unit to
Glaxo for $5.25 billion. The companies are also planning to combine
their consumer divisions, which sell medication that doesn't
require a prescription.
Shares of biopharmaceutical firm Shire PLC also finished higher,
by 7.6%. An estimated "robust" 13% earnings per-share compound
annual growth rate from 2013 through 2018, "at a minimum given
pipeline news and further cost control, justifies upside for the
shares," said Jefferies which on Tuesday reiterated its buy rating
on Shire.
But mining issues lost ground, with Anglo American PLC down 0.6%
following a Financial Times report that the company is getting
ready to leave its platinum mines at Rustenberg in South Africa.
Labor strikes that have hurt the country's platinum sector are
among the factors Anglo American is assessing as it considers its
future at Rustenberg, according to the report.
Platinum prices on Monday dropped 2% as a pay offer by platinum
producers in South Africa fell short of union demands, which may
result in a strike by workers continuing for weeks, according to
Bloomberg.
Shares of Randgold Resources Ltd. were off 2.4%, Fresnillo PLC
dropped 2.3% and Rio Tinto Ltd. (RIO) pulled back by 1%.
Investors in the U.K. market will soon likely have another stock
to watch, as Card Factory reportedly said it plans to list shares
on the London Stock Exchange next month. The greetings-card
specialist, which is majority owned by private equity group
Charterhouse Capital Partners, could raise up $90 million from the
float, according to Reuters.
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