European stocks rise, buoyed by chemical and health shares

[LONDON] European equities gained on Monday, led by rising healthcare stocks, after Shire agreed to buy NPS Pharmaceuticals for US$5.2 billion and Roche also struck a deal.

Chemicals shares also performed well after U.S. investment bank Citigroup upgraded several European chemicals companies, including BASF.

Citi said that falling oil price would pose short-term problems for some of the companies, but a weaker euro would boost their earnings.

The pan-European FTSEurofirst 300 index rose 0.5 per cent to 1,352.67 points in early trading. The eurozone's blue-chip Euro STOXX 50 index advanced 1 per cent, rebounding from Friday.

The STOXX Europe 600 Healthcare Index rose 0.8 per cent.

Early gains in Shire fizzled out, but rival Swiss healthcare group Roche rose 0.8 per cent after it moved to acquire a majority stake in the molecular and genomic analysis company Foundation Medicine Inc for as much as to US$1.18 billion.

"The Shire deal is likely to mean that there will be no fresh bid speculation coming through on Shire itself, although the ongoing consolidation within the industry means the sector will remain of interest to investors," said Terry Torrison, managing director at Monaco-based McLaren Securities.

Sanofi also climbed 1.6 per cent after the European Medicines Agency agreed to review an application by Sanofi and Regeneron for their cholesterol-lowering drug, alirocumab.

French carmaker Peugeot performed well, rising 3 per cent after Credit Suisse upgraded its rating on the stock to"neutral" from "underperform".

However, some Russia-exposed companies - such as drinks group Carlsberg - fell after the rating agency Fitch cut its rating on Russia.

The FTSEurofirst 300 index has swung between lows of around 1,320 points and 1,370 points since the start of 2015, largely because of uncertainty over the outcome of elections in Greece later this month and whether the European Central Bank will begin new economic stimulus measures this month.

Some traders expect the European stock markets to remain prone to such volatility until clarity emerged on both those issues. The left-wing opposition Syriza party - which is opposed to Greece's international bailout programme - still leading the polls in Athens. "Expect volatility to remain for the European stock markets in the near-term," said Hampstead Capital LLP hedge fund manager Lex van Dam.

REUTERS