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FTSE 100 Index surges as axed Pfizer merger deal boosts pharmaceutical stocks

Published 06/04/2016

The FTSE 100 Index climbed after the governor of Opec said an output freeze could be enforced following a meeting on April 17
The FTSE 100 Index climbed after the governor of Opec said an output freeze could be enforced following a meeting on April 17

Soaring pharmaceutical stocks bolstered the London market after US drugs giant Pfizer scrapped its planned mega-merger.

Pfizer and Irish rival Allergan said they were terminating their 160 billion US dollar (£113 billion) deal by "mutual agreement", days after the US Treasury unveiled new measures to curb tax avoidance, including so-called inversion deals.

The FTSE 100 Index surged 70.4 points to 6161.6, as London-listed healthcare stocks lifted amid speculation that Pfizer may search for another partner in a bid to relocate its headquarters.

Shire was the biggest riser, up more than 5%, or 209p, to 4258p, while AstraZeneca rose more than 4%, or 176.5p, to 4127.5p

Pfizer said it would pay Allergan 150 million dollars (£106 million) to cover expenses run up during negotiations on the deal.

The tie-up would have been the largest inversion deal in corporate history, a tax-saving manoeuvre in which a US company reorganises in another country with a lower corporate tax rate.

Commodity stocks also climbed amid fresh hopes that a cut to oil production was around the corner.

Antofagasta was up 5.8p to 438.5p and Royal Dutch Shell rose 13.5p to 1668.5p after the Kuwaiti governor of the oil cartel Opec said an output freeze could be enforced following a meeting in Qatar on April 17.

Nawal Al-Fuzaia also said she expects a balance of supply and demand to be reached in the second half of this year, leading to higher oil prices.

The price of Brent crude was up 5%, or 1.9 dollars, to 39.77 US dollars a barrel.

In Europe, Germany's Dax was up 0.64%, while the Cac 40 in France rose 0.81%.

The pound was slightly down against the dollar at 1.42, as sterling continued to be hit by fears that Britain will vote to leave the European Union.

Sterling was also down 0.4% against the euro at 1.24.

In stocks, budget airline easyJet saw its shares come under fire after admitting it took a knock from strikes in France last week.

The low-cost carrier said the number of passengers it carried rose by 4.3% to 5.7 million in March, up from 5.5 million in the same month last year, but its load factor fell 1.3% to 91.3% after industrial action triggered a wave of flight cancellations.

Shares dropped 3%, or 46p, to 1476p, while British Airways-owner IAG also came under pressure following the news, falling 14p to 535p.

Mining giant Glencore took a hit after announcing it would sell a substantial stake in its agricultural business to a Canadian pension fund.

The sale to Canada Pension Plan Investment Board will raise 2.5 billion US dollars (£1.8 billion) and will be used to drive down Glencore's debt pile.

Shares were down 1.75p to 140.1p.

Away from the top tier, shares in embattled tool rental firm HSS Hire fell after losses deepened following weaker demand and higher costs.

The company said a slide in uptake from bigger customers took its toll on the business, widening pre-tax losses by £5.3 million to £13.8 million for the year to December 26 2015.

Shares fell 2.8p to 84p.

The biggest risers in the FTSE 100 Index were Shire up 209p to 4258p, AstraZeneca up 176.5p to 4127.5p, Prudential up 42.5p to 1310.5p, Next up 160p to 5410p.

The biggest fallers in the FTSE 100 Index were easyJet down 46p to 1476p, IAG down 14p to 535p, Glencore down 1.75p to 140.1p, Whitbread down 36p to 3809p.

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