* FTSEurofirst 300 closes down 0.2 pct at 1,358.91 points
* AstraZeneca slumps after rejecting "final" Pfizer bid
* Deutsche Bank capital increase hits bank stocks
By Sudip Kar-Gupta
LONDON, May 19 European equities were pulled
down on Monday by the pharmaceuticals group AstraZeneca,
which slumped after rejecting a bid from Pfizer, and by
Deutsche Bank's announcement of a capital increase.
The pan-European FTSEurofirst 300 index, which last
week hit a 6-year high of 1,372.81 points, closed down 0.2
percent at 1,358.91 points. The euro zone's blue-chip Euro STOXX
50 index also fell 0.1 percent to 3,169.90 points.
AstraZeneca's shares dropped 11.1 percent to take the most
points off the FTSEurofirst 300, after the British company
rejected a sweetened "final" cash-and-stock offer from Pfizer,
casting doubt on the U.S. drugmaker's 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's shares fell 1.7 percent after it
announced an 8 billion euro ($11 billion) capital increase.
The fall pushed the STOXX Europe 600 Bank Index down
by 0.8 percent, with some analysts and investors expecting that
other banks may also have to raise capital to strengthen their
"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.
In spite of Monday's pullback, some investors were still
upbeat on the prospects for European equities, with both the
FTSEurofirst 300 index and the STOXX Europe 600 Bank Index up by
nearly 20 percent since the start of 2013.
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 up by 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
($1 = 0.7289 Euros)
(additional reporting by Francesco Canepa; Editing by Kevin