European Shares Rebound; AstraZeneca Surges

By Dow Jones Business News, 
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By Josie Cox and Tommy Stubbington

Shares in AstraZeneca PLC surged after U.S. drug giant Pfizer Inc. confirmed it had made a renewed approach valued at nearly $100 billion, adding to an upbeat tone in equity markets Monday and helping sterling to a 4 1/2 year high against the dollar.

U.K.-listed AstraZeneca, which has declined to engage in talks with Pfizer, saw its shares climb more than 15%.

European shares bounced back to open the week on a stronger note, with the further signs of an uptick in merger- and-acquisition activity trumping tensions in Ukraine.

The healthcare sector was the standout performer, with Bayer AG the second largest gainer in the pan-European index and the Stoxx 600 Healthcare index up 2.0%.

The German pharmaceuticals group posted a 23% jump in first-quarter net profit, beating analysts' expectations, while French peer Sanofi said it had successfully completed the first of two Phase III clinical studies of a proposed dengue vaccine, encouraging investors.

Elsewhere, Siemens AG of Germany barged in on Alstom SA's plans to sell its energy assets to General Electric Co. Sunday, proposing a counter offer to a proposed deal from last week.

That helped the Stoxx 600 Europe record a 0.5% gain midmorning, while Germany's DAX climbed 0.9%, France's CAC-40 0.6% and the U.K.'sFTSE 100 0.3%.

In the U.S., stocks were poised to open higher, with futures contracts indicating a 0.3% opening gain for the S&P 500. Changes in futures don't always accurately predict market moves after the opening bell.

"The boost to sentiment provided by recent outbreaks of M&A excitement shows how important corporate activity is to maintaining upward momentum, especially while earnings news remains so lukewarm," said Ian Williams, economist and strategist at brokerage Peel Hunt.

There was further downbeat earnings news, Monday. Swiss-based cement maker Holcim Ltd. said revenue in the first quarter had fallen 5.3%, pressured by unfavorable shifts in exchange rates, ahead of a targeted merger with French rival Lafarge SA.

Around 12% of Stoxx Europe 600 companies have reported first-quarter earnings so far, with more than half missing forecasts, according to data from FactSet.

One of the biggest fallers in the European index, however, was U.K. oil and gas company BG Group following news the company's chief executive has resigned with immediate effect for personal reasons.

European indexes had fallen on Friday amid an escalation of the confrontation between Russia and Ukraine that rattled investors, and those fears lingered in the background.

Over the weekend, pro-Russia rebels in eastern Ukraine raised the stakes in their conflict with Kiev by parading Western military observers as hostages and showing images of three bloodied Ukrainian intelligence officers the militants separately said they had detained.

The U.S. and European Union are now preparing to impose a new round of sanctions against Russia, Obama administration officials said on Sunday.

In currency markets, the pound jumped 0.3% to $1.6852, its strongest since November 2009. Analysts and traders said the prospect of the AstraZeneca deal was giving the British currency an extra boost amid a sluggish start to the week for the greenback.

"We are in an environment where M&A flows are supportive for sterling. That is a factor behind the move this morning," said Phyllis Papadavid, a senior foreign-exchange strategist at BNP Paribas.

Caution ahead of a raft of important U.S. economic data later in the week was weighing on the dollar, she added.

The euro also advanced, adding 0.2% to trade at $1.3868 against the dollar.

Write to Tommy Stubbington at tommy.stubbington@wsj.com


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This article appears in: Energy , Forex and Currencies

Referenced Stocks: GE , PFE , SIEGY

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