* FTSE 100 up 0.5 pct
* AstraZeneca jumps as Pfizer confirms bid interest
* New US sanctions on Russia prompt choppy trade
(Adds quotes, detail, updates prices)
By Alistair Smout
LONDON, April 28 AstraZeneca shares surged to
boost Britain's top share index on Monday, after U.S. rival
Pfizer said it wanted to buy the drugmaker.
The FTSE 100 looked set to post a new 7-week closing
high, despite a volatile afternoon session as investors digested
new sanctions on Russia from the United States.
AstraZeneca jumped 15 percent after Pfizer confirmed
on Monday it had approached the drugmaker in January and said it
had contacted the company again on April 26 seeking discussions
about a takeover in what would be one of the largest
pharmaceuticals deals ever.
The renewed approach is the latest in a burst of deal-making
and bids in the healthcare industry aimed at gaining scale or
specialising in certain areas.
"AstraZeneca was conclusive in saying that the bid was too
low, hence the reason we're seeing such a hefty premium being
applied to Friday's prices today," said Alastair McCaig, analyst
at IG, adding that it was encouraging for the market that
activity in mergers and acquisitions was picking up.
AstraZeneca added about 30 points to the FTSE 100. The
shares had traded 4 and a 1/2 times their 90-day daily average
volume by 1413 GMT, with total turnover on the FTSE 100 less
than half of its average.
Astra's share price gain raised the group's market
capitalisation by roughly 7.7 billion pounds ($13 billion).
The prospect of more corporate activity in the sector also
lifted Shire and GlaxoSmithKline. Shire added
around 10 percent and GlaxoSmithKline about 6 percent last week.
Without further news, Astra shares were set to consolidate
around current levels, extending their gains only if it looks as
if a deal is going ahead, traders said.
New sanctions on Russia from the United States contributed
to choppy afternoon trade. Markets initially took a hit when the
sanctions were announced, fearing economic fallout from the
move, but then rebounded as analysts said the details of the
sanctions were less harsh than anticipated.
"It's been a long week since we had a sense of optimism that
negotiations could pave the way to a solution. But these are
targeted, rather than a widescale, scatter-gun mentality, which
is encouraging," IG's McCaig said.
The FTSE 100 was up 32.91 points, or 0.5 percent, at
6,718.60 by 1435 GMT, with AstraZeneca's rise accounting for all
of the index's gains, which set it up for a new 7-week closing
high as it rallied through 6,703.
Analysts said a rebound in corporate dealmaking could offset
concerns about frothy valuations for British firms and lower
analyst forecasts, keeping the FTSE 100 stuck in a range for
"It just shows how important M&A is to keep sentiment
positive given that the macro, although it's improving, is kind
of priced in now," said Ian Williams, a Peel Hunt equity
($1 = 0.5948 pounds)
(Additional reporting by Tricia Wright; Editing by Sonya