London open: Pharma M&A gives UK stocks a lift

22nd Apr 2014 08:59

- FTSE 100 at highest since April 4th - Astra jumps on Pfizer takeover speculation- GSK announces massive three-part deal with NovartistechMARK 2,729.51 +1.85%FTSE 100 6,683.16 +0.87%FTSE 250 16,031.64 +0.78%Strong gains from heavyweight pharmaceutical groups gave UK markets a boost on Tuesday morning, as investors returned to their desks in a positive mood following the four-day Bank Holiday weekend.AstraZeneca was rising strongly on speculation that Pfizer could make a takeover approach for the company in the region of £60bn, representing the biggest deal in industry history and the largest foreign takeover of a UK business ever.Meanwhile, GlaxoSmithKline (GSK) jumped after announcing a massive three-part deal with Swiss pharmaceuticals peer Novartis, which will see shareholders receive a £4bn capital return. M&A activity surrounding US companies Eli Lilly and Allergan were also giving lifting sentiment across the sector.The FTSE 100 was trading 0.9% higher at 6,683 in early trading; it has not closed above this level since April 4th when it finished the session at 6,695.55."Should the hurdles 6,600 and 6,650 be beaten (now turned supportive for any backtrack) the likelihood is that we go on to test six-week highs of 6,700," said Mike van Dulken, Head of Research at Accendo Markets.However, he said to "keep an eye on the tense Ukraine situation as it has the potential to overshadow any corporate news, be it good or bad".Astra, GSK lead pharma stocks highAstraZeneca was trading as much as 8% higher this morning after The Sunday Times said Pfizer made a tentative $100bn approach for its British-Swedish rival. While AstraZeneca reportedly rejected the informal offer, Analyst Andrew Baum from Citigroup said he expected Pfizer to "push aggressively ahead with a second approach".Investors at GSK celebrated the company's announcement this morning that will see it and Novartis create a new Consumer Healthcare business and exchange certain assets in a three-part major transaction. The proposed deal "accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings", said GSK's Chief Executive Sir Andrew Witty.Others in the sector including Shire, Smith & Nephew, BTG and NMC Health were also making decent gains this morning, along with pharmaceutical and biotech investment trust Worldwide Healthcare.Heading the other way were resource stocks with Rio Tinto, Randgold, Shell, Glencore Xstrata and BG Group trading in the red.Even Polymetal was lower despite the Russian precious metals producer saying it had made a "strong start to the year" with 34% growth in production. Sales, however, lagged output during the period due to seasonal factors.FTSE 250-listed telecoms provider Colt was a heavy faller this morning after saying margin pressures chipped away at quarterly earnings. The company warned that full-year operating profit before restructuring charges is expected to range between 5% and 10% below current consensus estimates.FTSE 100 - RisersAstraZeneca (AZN) 4,072.50p +7.70%Shire Plc (SHP) 3,054.00p +4.41%GlaxoSmithKline (GSK) 1,625.50p +4.27%Royal Mail (RMG) 523.00p +2.75%Diageo (DGE) 1,865.50p +2.00%Smith & Nephew (SN.) 882.00p +1.85%Aberdeen Asset (ADN) 444.80p +1.83%British Sky Broadcasting Group (BSY) 904.50p +1.63%Melrose Industries (MRO) 286.00p +1.49%GKN (GKN) 396.70p +1.46%FTSE 100 - FallersRandgold Resources Ltd. (RRS) 4,631.00p -1.84%Rio Tinto (RIO) 3,250.50p -1.16%Babcock International Group (BAB) 1,206.00p -0.82%Anglo American (AAL) 1,535.00p -0.78%Glencore Xstrata (GLEN) 312.45p -0.54%Standard Chartered (STAN) 1,321.50p -0.30%Fresnillo (FRES) 865.50p -0.29%RSA Insurance Group (RSA) 94.55p -0.16%BAE Systems (BA.) 388.60p -0.13%Petrofac Ltd. (PFC) 1,403.00p -0.07%FTSE 250 - RisersBTG (BTG) 551.00p +4.06%Worldwide Healthcare Trust (WWH) 1,255.00p +3.29%NMC Health (NMC) 514.00p +2.99%Go-Ahead Group (GOG) 2,044.00p +2.77%Phoenix Group Holdings (DI) (PHNX) 654.00p +2.19%Genus (GNS) 1,020.00p +2.10%Enterprise Inns (ETI) 142.90p +2.07%Hikma Pharmaceuticals (HIK) 1,527.00p +2.07%Rank Group (RNK) 161.60p +2.02%Murray Income Trust (MUT) 775.50p +1.97%FTSE 250 - FallersCOLT Group SA (COLT) 131.20p -9.33%Centamin (DI) (CEY) 52.75p -1.86%Computacenter (CCC) 643.50p -1.00%African Barrick Gold (ABG) 257.00p -0.81%PayPoint (PAY) 1,171.00p -0.76%Wetherspoon (J.D.) (JDW) 848.00p -0.64%EnQuest (ENQ) 127.80p -0.62%Kazakhmys (KAZ) 232.60p -0.60%QinetiQ Group (QQ.) 220.60p -0.45%Polymetal International (POLY) 611.00p -0.41%BC