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Firmer pharma stocks help lift UK's FTSE to 2-week high
December 19, 2013 / 4:05 PM / 4 years ago

Firmer pharma stocks help lift UK's FTSE to 2-week high

* FTSE 100 rises 1 pct to highest level in 2 weeks

* AstraZeneca boosted by acquisition deal

* Investors see FTSE rallying into end of 2013

* FTSE could end 2013 around 6,700 -Sunrise Brokers

By Sudip Kar-Gupta

LONDON, Dec 19 (Reuters) - Britain’s main share index rose to a two-week high on Thursday, helped by gains in pharmaceutical stocks and by a pledge from the U.S. Federal Reserve to keep interest rates low.

Some investors expect the blue-chip FTSE 100 index to rally into the end of 2013, forecasting gains of roughly 50-150 points between now and the end of this month.

The FTSE 100 was up by around 1 percent, or 63.39 points, at 6,555.47 points in late session trading, bringing the index’s gains this year to 11 percent.

The FTSE’s rise broadly tracked those of stock markets worldwide after the Fed sugar-coated a surprise first cut to its crisis-era bond-buying programme with a pledge to keep interest rates low.

Investors around the world took the Fed’s decision to trim the programme - which was aimed at boosting the overall economy - by $10 billion to $75 billion a month largely in their stride, considering it a modest step that a recovering U.S. economy could withstand.

A rise in major pharmaceutical stocks such as AstraZeneca and GlaxoSmithKline added the most points to the FTSE, as merger and acquisition (M&A) activity gave the sector a boost.

AstraZeneca was up 1.1 percent in late trade after agreeing to buy Bristol-Myers Squibb’s stake in a diabetes joint venture between the two drugmakers for an initial $2.7 billion, plus up to $1.4 billion in additional payments.

Glaxo was up 1.2 percent.

“M&A activity in pharma is possibly going to give the FTSE a bit of a kick higher,” said Toby Campbell-Gray, head of trading at Tavira Securities.


The FTSE was on track for its first weekly gain in seven weeks, snapping its longest weekly losing streak since 2008.

Premier Asset Management fund manager Chris White forecast a further 50-100 point rise for the FTSE 100 until the end of 2013, while Sunrise Brokers equity strategist said the index could end 2013 at the 6,700 point level.

Mellor expected equities to continue to rise into 2014 as economies gradually recover from the 2008 credit crisis.

Mellor recommended investors to favour sectors such as industrial goods and carmakers, which often outperform when the economic cycle improves.

“You should still keep beta in your portfolio and opt for the more cyclical end of the market,” he said.

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