Britain's FTSE lifted by pharma firms
Pharmaceutical firms helped Britain's top share index to gains on Wednesday.
|||London - Pharmaceutical firms helped Britain's top share index to gains on Wednesday, benefiting as Pfizer was set to pull out of a deal for Allergan, prompting speculation over other M&A in the sector.
Pharmaceutical stocks Shire and AstraZeneca rose 2.4 percent and 2 percent respectively, the top FTSE 100 gainers.
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Read: Obama's inversion curbs kill Pfizer's Allergan deal
US drug maker Pfizer agreed to terminate its $160 billion agreement to acquire Botox maker Allergan Plc, in a major victory to U.S. President Barack Obama's drive to stop tax-dodging corporate mergers.
The move came after the US Treasury unveiled new to curb tax “inversions”. While it was unclear the extent to which a bid from Pfizer for a UK-listed drugmaker would fall foul of the same rules, traders said that the sector was rallying today on the possibility that the firms might come back into play.
“The possibility now is that Pfizer goes shopping again, and you might be prepared to develop a case that maybe a firm like Shire becomes the bid target,” said Chris Beauchamp, market analyst at IG.
“The implications of the new rules would have to be worked out, but if you've got cash sloshing around the sector, people are wondering who will benefit.”
There were also several broker notes from the likes of Credit Suisse, saying that Shire's bid for Baxalta should go ahead despite the new ruling.
“It looks as though Shire will still be able to move forward with the Baxalta deal, despite the rules,” Beauchamp added.
Britain's FTSE 100 was up 18.59 points, or 0.3 percent at 6,109821 by 0836 GMT, with health care stocks adding around 9 points to the index.
Airlines were among top fallers, led lower by easyJet . The budget airline fell 2.1 percent, the top FTSE 100 faller, after its disappointing latest passenger statistics.
Traders said the figures showed that it was underperforming the likes of Ryanair, which produced stronger figures last month.
“Budget airline easyJet's latest figures disappointed investors,” AJ Bell Investment Director Russ Mould said in a note.
“Passenger numbers rose in March but the load factor fell after the airline was forced to cancel hundreds of flights, principally due to strike action in France.”
Peer and British Airways owner IAG was down 1.3 percent.
REUTERS