Pharma Stocks Push Europe Lower

Ivaylo
10 Nov, 2006
New York City

European shares traded in the red on Friday morning, due to a concerns over U.S. consumer sentiment data and recent oil price strength and as the downturn in pharmaceuticals stocks such as GlaxoSmithKline and AstraZeneca continued. Friday represents the third day of share price weakness for these companies. By mid morning, the FTSE 100 in London lost 0.5%, while Frankfurt Xetra Dax fell 0.7%, the CAC 40 in Paris shed 0.5%.

[R]6:30AM Pharma stocks and higher oil lead European stocks lower on Friday.[/R]
European markets were lower on Friday. By mid morning, the FTSE 100 in London lost 0.5% to 6,201.8, while Frankfurt Xetra Dax fell 0.7% to 6,316.5, the CAC 40 in Paris shed 0.5% to 5,422.43.

Decliners

Pharma stocks led the decline. Bayer lost 0.3%, Novartis declined 1% and Roche shares dipped 0.3%. Roche decline was limited by an upgrade to overweight at J.P. Morgan, which argued that the quality of its drugs means it can keep pricing power. But it was AstraZeneca in Britain which was was worst hit, down 2.7%.

Hermes, the French luxury goods group, fell 3.2% on profit taking after reporting a 6.2% rise in like-for-like sales in the third quarter. German sportswear maker Adidas fell a further 2.4% following the unexpected profit warning Thursday. Deutsche fixed-line peers were also weaker. KPN, the Dutch group, lost 1%, while Telekom Austria fell 1.5%.

Electricite de France edged 0.4% lower in Paris after it said that, although sales in France rose 7.4% to 22.90 billion euros, sales in the rest of the world slipped 12% to 1.83 billion euros after asset sales.

Advancers

Oil prices stayed over $60 a barrel in electronic trade on Friday, helping Royal Dutch Shell and Eni to gain some ground. Eni, the Italian oil and natural gas group, rose 0.4%, while Royal Dutch Shell added 0.10%.

French chemicals group Rhodia rose 2.3% after it swung to a net profit of 71 million euros helped by a 34 million euro gain from deferred tax assets.

Oil and gold

Oil prices steadied Friday after jumping above $61 a barrel the previous day in reaction the leadership change in the U.S. Congress and amid continued uncertainties about OPEC production cuts. The contract traded at $60.32 a barrel in early trading in London, near a two-week high. Brent crude fell 84 cents to $60.48 a barrel on the ICE Futures exchange.

Gold opened Friday at a bid price of $634.30 a troy ounce, up from $625.20 late Thursday.

Currencies

The euro continued to edge up slightly against the U.S. dollar on Friday despite better-than-expected U.S. trade deficit figures. In morning trading, the euro bought $1.2873, up from $1.2824 late Thursday in New York. Among other currencies, the British pound rose to $1.9117 from $1.9055 after the Bank of England raised interest rates to 5%, as was expected. The dollar was down slightly to purchase 117.43 Japanese yen from 117.97 yen.

[R]5:30AM Gold and silver rallied on Thursday on climbing oil, lower dollar.[/R]
December gold gained $18.50 to end at $636.80 a troy ounce on the NYME. December silver added 50 cents to finish at $13.05 an ounce. Meanwhile, January platinum rose $33.70 to close at $1,201 an ounce, and December palladium climbed $10.50 to finish at $338.90 an ounce. December copper futures finished 6.45 cents higher at $3.3090 per pound.

The front-month December crude oil contract rose $1.33, or 2.2%, to finish at $61.16 a barrel. Front-month December unleaded gasoline rose 3.74 cents to finish at $1.6010 a gallon. Natural gas futures for December delivery settled 13.2 cents higher at $7.95 a million British thermal units.

At the New York Board of Trade, futures on raw sugar in foreign ports hurried to three-week highs with help from fund buying and short covering. Arabica coffee futures were also boosted by fund buying and short covering. December coffee futures closed 3.45 cents higher at $1.1920 a pound, and the March coffee contracts closed 3.45 cents higher at $1.2330 a pound.