* FTSEurofirst 300 falls 0.3 pct
* AstraZeneca slumps after rejecting "final" Pfizer bid
* Deutsche Bank down after capital increase, hits bank
By Sudip Kar-Gupta
LONDON, May 19 European equities slipped on
Monday, pulled down by pharmaceuticals group AstraZeneca
, which slumped after rejecting a bid from Pfizer
, and by Deutsche Bank's capital increase.
The pan-European FTSEurofirst 300 index, which last
week hit a 6-year high of 1,372.81 points, was down 0.3 percent
at 1,357.47 points in late-session trading. The euro zone's
blue-chip Euro STOXX 50 index also retreated 0.3
percent to 3,164.52 points.
AstraZeneca's shares dropped 10.5 percent to take the most
points off the FTSEurofirst 300, after the British firm rejected
a sweetened "final" cash-and-stock offer from Pfizer, causing
uncertainty as to whether the U.S. drugmaker would pull off its
plan to create the world's biggest pharmaceuticals group.
"Despite Pfizer having spent a large amount of money and
time, the signal seems clear from AstraZeneca's board of
directors, UK politicians and mainstream media that this is a
bad deal, and we see limited efforts from Pfizer going forward,"
said Peter Garnry, head of equity strategy at Saxo Bank.
"Its shareholders will not appreciate a fourth attempt as it
will inflate the valuation too much relative to deal risk," he
BANK SHARES WEAKEN
Deutsche Bank weakened by 2.2 percent after it
announced an 8 billion euro capital increase.
The fall in Deutsche Bank pushed the STOXX Europe 600 Bank
Index down by 0.9 percent, with some analysts and
investors expecting that other banks may also have to raise
capital to strengthen their balance sheets.
"The banks are under all sorts of pressure at the moment. I
think that quite a few investors got into the banks' rally quite
late and have been caught out at the top," said Rupert Baker,
equity sales executive at Mirabaud Securities.
The STOXX Europe 600 Bank Index has climbed by nearly 20
percent since the start of 2013.
In spite of Monday's pullback, some investors were still
upbeat on the prospects for European equities.
Richard Marwood, senior investment manager at AXA Investment
Management, said prospects that the European Central Bank (ECB)
could cut interest rates next month were providing a relative
safety net for equities, since any such move by the ECB would
hit returns on bonds and enhance the appeal of equities.
Nick Davis, European equities fund manager at Threadneedle
Investments, also said European shares looked a good bet in the
long run, with the FTSEurofirst 300 index still up by nearly 3
percent since the start of 2014.
"Europe is moving in the right direction. This process has
been and will likely continue to be volatile given the necessary
adjustments but we expect the market will ultimately reward
those patient enough to look through the volatility," he said.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(additional reporting by Francesco Canepa; Editing by Jeremy
Gaunt and Pravin Char)