March 28, 2018 / 9:44 AM / a year ago

Defensives push FTSE to one-week high as Shire soars

LONDON (Reuters) - A move into defensive stocks helped Britain’s FTSE climb to a one-week high on Wednesday, shaking off broader concerns over the U.S. tech sector that rattled global equity markets. Shares in pharma firm Shire surged.

FILE PHOTO - A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008. REUTERS/Toby Melville/File Photo

Shire Plc SHP.L jumped around 14 percent after Japan’s Takeda Pharmaceutical Co (4502.T) said it was considering a possible offer for the London-listed drugmaker.

“We see the possible strategic fit given the Japanese pharma’s focus therapeutic areas of oncology, gastrointestinal and neuroscience, with Shire bolstering the latter two franchises,” analysts at Jefferies said in a note.

The gains in Shire helped the FTSE recover early losses, as bad news about U.S. tech giants and fears of a trade war fuelled concern over valuations across global equities.

The FTSE 100 index ended up 0.6 percent at 7,044.74 points, whereas Europe's STOXX 600 index rose 0.3 percent. Demand for defensive, bond-proxy-type stocks offset falls among cyclical sectors such as mining and energy. British mid caps .FTMC fell 0.2 percent.

Global trade tensions hit the value of key metals such as copper, and a surprise increase in U.S. crude inventories sent Brent crude futures LCOc1 back below $70 a barrel.

Tech stocks have come under pressure amid signs regulators might rein in the sector following years of strong growth and privacy concerns around Facebook (FB.O) and Google (GOOGL.O).

Facebook shares are now down 14 percent this month.

“Everyone wants to know how far this tech sell-off has to go and how much it affects everyone else,” said IG’s Chris Beauchamp. “People can cope with a modest sell-off, but when you get to these proportions and it hits the strongest performers so hard ... it sends the signal that others can be vulnerable, too.”

Defensive stocks such as utilities, however, gained as investors bought back into sectors that have been relatively unloved as bond yields marched higher, rendering their big dividends less attractive.

Unilever (ULVR.L) was among top FTSE gainers, rising 4.7 percent after UBS upgraded the consumer goods giant to “buy” on expectations of improving volume growth and operating margin expansion.

Capita (CPI.L) rose 1.5 percent after a person familiar with the matter said the outsourcing firm would publish a five-year transformation plan and details of a rights issue with its annual results on April 26.

(GRAPHIC - FTSE 100 vs 250:

Reporting by Tom Pfeiffer and Kit Rees; Editing by Larry King and Mark Potter

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