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European shares advance on drugmakers gain

European shares advance on drugmakers gain
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First Published: Wed, May 13 2009. 02 57 PM IST
Updated: Wed, May 13 2009. 02 57 PM IST
London: European equities advanced in choppy morning trade on Wednesday, with investors taking refuge in defensive drugmakers and energy companies, but financial stocks retreated after recent heavy gains.
At 2:41pm, the FTSEurofirst 300 index of top European shares was up 0.5% at 856.49 points after falling as low as 849.26. The benchmark, which slumped 45% in 2008, is up more than 32% from its March 9 lifetime low.
Energy stocks tracked crude oil prices, which rose 1.4% to trade near $60 a barrel. Royal Dutch Shell, BG Group , Tullow Oil, Repsol, Total and StatoilHydro added 0.6-2.7%.
Drugmakers were also in demand. AstraZeneca rose 2.7%, Sanofi-Aventis gained 3.5% and Novartis was up 3.7%.
“The nadir that was March 2009 has been long forgotten, as talk of ‘green shoots´ replacing ‘credit crunch´ as the phrase of the moment,” said Chris Hossain, senior sales manager at ODL Securities.
“Whether realistic or not, more and more people are buying in to the recovery play, looking for undervalued stocks.”
Financial stocks fell, however, after recent gains as investors took profits. The DJ Stoxx banks index, which hit a six-month high last week, has doubled from a trough in early March.
HSBC was down 3.7%, Barclays fell 4%, Lloyds slipped 2.9% and UBS declined 4%.
Dutch banking and insurance group ING fell 5.6 percent after it reported a much-bigger-than-expected first-quarter net loss, hurt by a sharply weaker insurance business.
“There has been some consolidation after a sharp move in the past weeks as people are waiting to see whether the upward move is sustainable,” said Koen De Leus, economist at KBC Securities.
“There are some indicators that justify an improvement in optimism. Recent data has come better than expected and has rebuilt market confidence, but it still has to be confirmed by more consumer spending,” he added.
Miners also retreated. BHP Billiton, Anglo American, Antofagasta, Xstrata and Eurasian Natural Resources were down 1.4 to 3.2 percent.
Rio Tinto fell 5 percent on growing speculation the global miner is set to launch a rights issue instead of selling $19.5 billion in stock and assets to China’s Chinalco aluminium group.
Belgian-French financial services group Dexia jumped 7 percent as it declared it was “on the mend” after first-quarter profit beat expectations due to keen cost control.
J Sainsbury Plc, Britain’s third-biggest grocer, posted an 11 percent rise in annual profit and said it was pressing ahead with expansion into convenience stores and non-food ranges despite the recession. But its shares were down 0.3 percent.
Telefonica rose 1.5 percent as it beat market expectations with a 9.8 percent rise in first-quarter net profit, as strong Latin American business helped offset Spanish weakness and allowed it to stick to full-year forecasts.
(Editing by Simon Jessop) REUTERS
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First Published: Wed, May 13 2009. 02 57 PM IST
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