AstraZeneca Helps Boost European Shares

By Tommy Stubbington 

Pharmaceutical shares led European markets higher Tuesday amid a flurry of deal activity and speculation, adding to buoyant postholiday sentiment.

Shares in drug maker AstraZeneca leapt as much as 8%--closing 4.7% higher--on reports it had been approached by Pfizer about a potential takeover, while GlaxoSmithKline and Novartis also rose after announcing a series of transactions that will reshape both companies.

Further lifting confidence in the sector was an offer by activist investor William Ackman and Valeant Pharmaceuticals to acquire Allergan.

The Stoxx Europe 600 health care subindex advanced 2.9%.

Overall, the Stoxx Europe 600 index gained 1.4%. The strong start to the week in Europe followed two sessions of gains for Wall Street on Friday and Monday, led by a continued rebound in technology stocks.

A further rise for U.S. stocks on Tuesday, following some upbeat earnings reports, gave European markets an additional boost.

"There is been a generally better vibe recently about big deals. Consolidation in the corporate sector usually generates value for shareholders. It fits with the idea that we are midway through the recovery," said Guy Foster, head of portfolio strategy at Brewin Dolphin, which manages GBP26 billion ($43.7 billion) in assets.

Global stocks have rebounded from last week's lows as investors grow less concerned about tensions in Ukraine, and taken modest encouragement from the start of the U.S. first-quarter earnings season.

Even so, concerns continue to linger as cracks appear in the agreement struck last week in Geneva between Russia and the West, with both sides accusing the other of having violated the deal.

"Geopolitical issues in Ukraine continue to cast a shadow on sentiment," said analysts at Crédit Agricole.

In commodities markets, gold was down 0.7% at $1,280.90 an ounce, and Brent crude oil fell 1.1% to $108.75 a barrel.

The Pfizer approach for AstraZeneca was reported over the weekend by the U.K.'s Sunday Times, which said informal conversations about a possible tie-up had taken place between the companies in recent weeks, and that AstraZeneca had knocked back approaches that could value the company at $101 billion.

Pfizer and AstraZeneca declined to comment on the reports.

Elsewhere, shares in Philips NV sank after the consumer electronics heavyweight reported a 14% drop in first-quarter net profit.

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