Europe Factors to Watch-Shares seen higher; focus on M&A

LONDON, April 28 Mon Apr 28, 2014 2:56am EDT

LONDON, April 28 (Reuters) - European equities were expected to bounce back on Monday, with a slew of merger and acquisition news seen improving sentiment in the market, although growing tensions in Ukraine could keep a lid on gains.

U.S. drugmaker Pfizer made a bid approach to AstraZeneca in January and contacted its British rival again on April 26 seeking to renew discussions about a takeover, the U.S. firm said on Monday.

A Pfizer bid for AstraZeneca, which is expected to open about 10 percent higher on Monday, would be one of the largest ever pharmaceuticals deals. The renewed approach comes amid a wave of mergers and acquisitions in the sector.

Merck & Co is in the final stages of selling its consumer healthcare unit for close to $14 billion, with Reckitt Benckiser Group and Bayer among final contenders to clinch a deal as soon as next week, people familiar with the matter said.

In another M&A news, Siemens and the French government intervened in General Electric's plan to buy the power arm of Alstom on Sunday with an alternative proposal, while reports said Pfizer could publicly show its interest in AstraZeneca as early as this week.

At 0650 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were 0.3 to 0.4 percent higher, although geopolitical concerns prompted investors to stay cautious.

The United States and Europe are preparing new sanctions against Russia as tensions escalated in eastern Ukraine. Pro-Russian rebels on Sunday paraded European monitors they are holding, freeing one but saying they had no plans to release another seven.

"The ongoing crisis in Ukraine is the biggest threat to the rally in the markets right now," Alpari analyst Craig Erlam said in a note. "Clearly if the crisis develops further, for example with Russian troops crossing the eastern border, we'd see investors attitudes change rapidly, with them becoming far more risk averse."

The pan-European FTSEurofirst 300 index, which hit a near six-year high earlier this month, ended 0.8 percent lower at 1,332.83 points on Friday, when U.S. stocks slipped 0.8 to 1.8 percent. In Asia, Japan's Nikkei share average fell 1.1 percent on Monday.

Investors also stayed cautious in buying riskier assets such as equities ahead of several key events later in the week, including U.S. Federal Reserve's April 29-30 policy meeting and macroeconomic numbers.

The U.S. central bank is set to continue reducing the pace of its massive bond-buying stimulus. As Fed policymakers are debating on what economic conditions would set the stage for an interest rate hike, investors will scrutinise Friday's non-farm payrolls data, which is expected to show an April rise of more than 200,000.

With the earnings season gathering pace in Europe, German drugmaker Bayer posted an 11 percent rise in first-quarter underlying operating profit.

According to Thomson Reuters StarMine, one-fifth of companies on the STOXX Europe 600 index have reported results so far, of which half have beaten or met analysts' expectations. However, only 42 percent companies have met or beaten the revenue forecasts.

Europe bourses in 2014: (link.reuters.com/pad95v)

Asset performance in 2014: (link.reuters.com/rav46v)

> Asian shares stutter on Ukraine tension, event risk > Wall St trips as Amazon tumbles; indexes slip for week > Nikkei sags as Wall Street slips, Ukraine tensions drive up yen > US 30-year yields tumble to 9-mth low as stocks, Russia weigh > Dollar off to slow start in event-packed week, yen firmer > Gold at 1-1/2 wk high as Ukraine tensions drive safe-haven bids > Nickel hits highest in almost 15 months on supply concerns > Brent nudges up near $110 on Ukraine tensions

COMPANY NEWS

ASTRAZENECA

U.S. drugmaker Pfizer made a bid approach to AstraZeneca in January and contacted its British rival again on April 26 seeking to renew discussions about a takeover, the U.S. firm said on Monday.

SIEMENS, ALSTOM

Siemens and the French government intervened in General Electric's plan to buy the power arm of Alstom on Sunday with an alternative European "champions" tie-up proposal and a pledge to act in France's national interest.

BAYER

German drugmaker Bayer published an 11 percent increase in first-quarter underlying operating profit, beating consensus as its pharmaceuticals business posted a strong start to the year.

Separately, Bloomberg reported Bayer was exploring the sale of its $10 billion plastics unit to focus on growing its health business, citing people with knowledge of the matter. (r.reuters.com/pez78v)

RECKITT BENCKISER

Merck & Co Inc is in the final stages of selling its consumer healthcare unit for close to $14 billion, with Reckitt Benckiser Group Plc and Bayer AG among final contenders to clinch a deal as soon as next week, people familiar with the matter said.

HOLCIM

Swiss cement maker Holcim posted a 9 percent rise in first-quarter operating profit on Monday, bearing the fruits of a cost-cutting programme as it prepares to merge with French rival Lafarge.

BANKIA

Spain's biggest bailed-out lender Bankia on Monday posted a 187-million-euro ($259 million) net profit for the first three months of 2014, more than double what it made a year ago, but below analyst forecasts.

SANOFI

The French drugmaker said the first of two Phase III clinical studies of a proposed dengue vaccine had been successfully completed, reaching its primary endpoint with a significant reduction in cases of the disease.

NOVARTIS

Chief Executive Joe Jimenez said the Swiss drugmaker can spend up to $5 billion on bolt-on buys that could strengthen its core businesses, in an interview with Swiss newspaper Schweiz am Sonntag.

PUBLICIS

The chief executives of advertising companies Publicis and Omnicom Group are working together to resolve a seven-month-old struggle over who will be chief financial officer of their combined group if the $35 billion merger is completed, three people close to the deal said on Sunday.

VIVENDI

Abu Dhabi's Etisalat has signed a two-part 3.15 billion euros ($4.36 billion) loan to help fund its acquisition of a 53 percent stake in Maroc Telecom, the Gulf telecom operator said in a bourse statement on Monday.

SWEDBANK

The Swedish bank reported first-quarter profits in line with market expectations and said events in Ukraine would probably further delay an expected increase in credit demand in the Baltic countries.

TOTAL

The French oil major has put its liquefied petroleum gas unit, Totalgaz, up for sale and has received around 10 expressions of interest from potential buyers, the daily Les Echos reported on Monday.

(Reporting by Atul Prakash)