Pedestrians pass the Royal & Sun Alliance building in the Mayfair district of London. RSA shares surged 17.75% to close at 515.5 pence yesterday as Zurich Insurance confirmed speculation that it is interested in buying the British rival.
AFP/London
Takeover news buoyed European stock markets yesterday, with sentiment also boosted by bargain-hunting after recent China-inspired losses, dealers said.
London’s benchmark FTSE 100 index of blue-chip companies won 0.77% to close at 6,555.28 points, encouraged also by data showing the British economy rebounded by 0.7% in the second quarter.
Frankfurt’s DAX 30 added 1.06% to end the day at 11,173.91 points, and the CAC 40 in Paris rose 1.01% to 4,977.32 points compared with Monday’s close.
In foreign exchange, the euro nudged lower to $1.1049 from $1.1091 late in New York on Monday.
Zurich Insurance confirmed speculation that it is interested in buying British rival Royal & Sun Alliance.
In reaction, RSA shares surged by 17.75% to close at 515.5 pence, easily topping the FTSE leaderboard.
The pharmaceuticals sector was also in focus as London-listed group Hikma bought US generic drugs company Roxane from German peer Boehringer Ingelheim for $2.65bn (€2.40bn) in the sector’s latest rapid round of consolidation.
The deal will transform Hikma into the sixth largest player in the US generics market, in terms of revenue, said a statement from Hikma, which is based in Amman, Jordan.
Hikma’s London share price jumped 11.59% to close at 2,321 pence following the news.
The deal comes one day after Israeli pharmaceutical giant Teva snapped up the generic drugs business of Allergan for $40.5bn, consolidating its position as a world leader in generics.
“Bid activity, strong corporate results and relative calm in China helped confidence return to European equities yesterday after a week-long slump,” said Jasper Lawler, market analyst at CMC Markets UK.
Meanwhile, shares in British engineering firm GKN jumped 7.32% to 316.60 pence after it agreed to purchase Dutch aerospace company Fokker Technologies Group.
European equities also rebounded yesterday as investors fished for bargain stocks.
“The fact that we’re coming off the back of five consecutive daily declines (in London) has prompted some bargain-hunting on the part of some investors,” noted analyst Michael Hewson at trader CMC Markets.
The region’s equity markets had fallen sharply on Monday as investors reacted to the biggest one-day plunge in Chinese equities in more than eight years.
Like European markets, Wall Street shrugged off the pessimism in Asia, with US stocks also rising yesterday.
In midday trades in New York, the Dow Jones Industrial Average was up 0.76%, the broad-market S&P 500 advanced 0.80%, while the tech-rich Nasdaq Composite Index rose 0.52%.
Investors were also awaiting this week’s US Federal Reserve’s monetary policy meeting for a handle on its plans for interest rates. The Fed will announce the outcome today.
