* FTSE 100 up 0.2 pct
* AstraZeneca jumps as Pfizer confirms bid interest
* New U.S. sanctions on Russia prompt choppy trade
(Updates with closing 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 closed just off a 7-week closing high
after a volatile afternoon session as investors digested new
sanctions on Russia from the United States.
AstraZeneca jumped 14.4 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
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 29 points to the FTSE 100. The
shares traded in volume of nearly 6 times their 90-day daily
average, with total turnover on the FTSE 100 just 80 percent of
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 rebounded slightly 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 14.47 points, or 0.2 percent, at
6,700.16 by the close, with AstraZeneca's rise bringing the
index into positive territory.
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 Alison