* Universal Health Services to buy Psychiatric Solutions
* Astellas Pharma Inc to buy OSI Pharmaceuticals Inc
* Energy shares weigh as oil slips
* Bargain hunters buy up beaten down shares
By Edward Krudy
NEW YORK, May 17 Mid- and small cap stocks
rallied late Monday as M&A activity in the health care and
biotech sectors offset a steep drop in energy stocks on falling
Stocks got a further lift as bargain hunters bought up
shares that have fallen on concerns euro zone debt problems
could hurt the global economy.
Universal Health Services Inc (UHS.N) said it would buy
mental health facilities operator Psychiatric Solutions Inc
PSYS.O for about $2 billion. Japan's Astellas Pharma Inc
(4503.T), agreed to buy U.S. biotechnology company OSI
Pharmaceuticals Inc OSIP.O for $4 billion.
Pressuring energy stocks U.S. crude oil futures fell
sharply on worries public debt burdens may stunt growth in the
euro zone. Signs China's economy may have peaked also helped
pressure commodity prices. Copper fell more than 5 percent.
Gary Bradshaw, portfolio manager at Hodges Capital
Management in Dallas, Texas said he had been using Monday's
earlier weakness to snap up beaten down shares.
"We think good earnings will keep moving the market
higher," he said. "It's held up remarkably well, despite the
negative news with Greece and the Gulf oil spill."
Bradshaw said he had bought Brigham Exploration Co BEXP.O
on Monday, which traded down 3.3 percent to $16.40.
The S&P MidCap 400 index .MID rose 0.2 percent while the
S&P SmallCap 600 index .SML added 0.6 percent. In comparison,
the benchmark S&P 500 .SPX rose 0.1 percent. Monday's rise
broke two days of losses for all indexes.
Shares in hospital operator Universal Health Services Inc
rose 7.9 percent to $42.14 after its $33.75 offer for
Psychiatric Solutions. Psychiatric Solutions fell 0.7 percent
Meanwhile Astellas Pharma Inc (4503.T), Japan's No. 2
drugmaker, agreed to buy U.S. OSI Pharmaceuticals Inc OSIP.O
for $57.50 per share. OSI's stock eased 4.1 percent to $57.35,
falling more in line with the offer price.
Weakness in the energy sector pressured the wider market as
the S&P mid cap energy index .4GSPE fell 2.3 percent and the
S&P small cap energy index .6GSPE lost 2.2 percent.
Among energy companies losing ground were Plains
Exploration & Production Co PXP.N down 2.8 percent to $23.91,
and Quicksilver Resources Inc KWK.N, down 1.9 percent to
On the New York Mercantile Exchange, front-month June crude
CLM0 fell $1.55, or 2.16 percent, to settle at $70.06 a
(Reporting by Edward Krudy; Editing by Andrew Hay)