* FTSEurofirst 300 hits 6-1/2-yr high before closing flat
* Pan-European index records 10th straight week of gains
* Shire jumps 17 percent on takeover approach
By Atul Prakash
LONDON, June 20 The FTSEurofirst 300 climbed to
a 6-1/2-year high on Friday and recorded its 10th straight week
of gains, with analysts saying that expectations of a pick-up in
merger and acquisition activity will further boost sentiment.
The benchmark index of top European shares advanced
0.4 percent this week, its longest weekly winning streak since
April. It closed flat at 1,394.98 points, after staying in
positive territory throughout the session, as some investors
took profits on the last trading day of the week.
The market was underpinned by a 1 percent rise in the
European healthcare index, making it the best-performing
sector, as Shire leaped 17 percent to 43.72 pounds after
AbbVie confirmed it had made an offer to acquire it.
Shire rejected the offer worth 46.26 pounds a share, saying
it fundamentally undervalued the company. Shire has been seen as
a takeover target for U.S. drugmakers due to a mid-sized market
value and its tax base in Ireland, where effective corporate tax
rates are among the lowest in the world.
"We have had a dearth in M&A activity in the last few years
but it does appear to be picking up as business confidence has
improved. This is supportive for the market," Robert Parkes,
equity strategist at HSBC, said.
"Investors' attention will start to shift from macroeconomic
data to the second-quarter earnings numbers. We are relatively
optimistic on the outlook for European earnings and expect them
to grow by 12 percent this year and the next."
According to Thomson Reuters data, 44 percent of companies
in the STOXX Europe 600 index reported earnings above
analyst estimates in the first quarter. On average, 48 percent
of companies beat analyst estimates in a typical quarter.
"M&A is going to be a big theme, especially in the pharma
sector, in the second part of the year. A lot of companies have
accumulated a lot of cash and are looking for interesting
deals," said Philippe Gijsels, the head of research at BNP
Paribas Fortis Global Markets in Brussels.
"The market has paused after a good week as some investors
have taken profits, but we are in a bull market. It's a good
environment for equities as economic outlook is improving and
central banks generally have been quite supportive."
Among other sharp movers, Norway's Telenor fell 2.1
percent after its trade minister said the government would ask
parliament for the right to cut its stake in the telecom company
and industrial group Kongsberg Gruppen.
France's state-controlled utility EDF fell 1.8
percent, down for a second day, as analysts at UBS and Natixis
cut their target price after the government decided to scrap a
planned increase in electricity prices.
"The 2013 re-rating of EDF was to a large extent driven by a
change in investor perception because the regulatory environment
seemed to become more reliable and predictable," UBS analysts
wrote in a note. "Therefore, the cancellation of the already
agreed tariff hike could lead to an increased risk perception on
lower regulatory visibility."
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Reporting by Francesco Canepa; Editing by Mark Heinrich)