European stocks posted a second week of gains this week, as companies from Alstom SA to GlaxoSmithKline PLC rallied amid mergers-and-acquisitions activity.
Alstom jumped 20 percent after people familiar with the matter said General Electric Co has held talks to buy the trainmaker, while Glaxo rose 6.2 percent after agreeing to sell its cancer drug business to Novartis AG and Meda AB surged 15 percent on a report that Mylan Inc has increased its bid for the Swedish drugmaker.
Falling this week was Royal Philips NV, which slid 7 percent after the world’s largest lighting company on Tuesday said its earnings before interest, taxes, amortization and one-time items fell 13 percent to 368 million euros. The average estimate of analysts surveyed by Bloomberg was 413 million euros (US$571.32 million).
Philips CEO Frans Van Houten attributed the decline to currency swings and challenging market conditions in China and Russia.
The STOXX Europe 600 Index added 0.3 percent to 333.5 this week, with healthcare stocks leading gains.
Equities declined on Friday amid concern that the crisis in Ukraine will spiral, leading to tit-for-tat sanctions between the the West and Russia. However, the benchmark has still climbed to within 2 percent of the six-year high it reached on April 4.
“The increase in deal activity should provide some support to markets,” Hugh Cuthbert, who helps manage about US$1 billion at SVM Asset Management Ltd, said by telephone.
“It’s encouraging to finally see that those with money in their pockets are spending on acquisitions. These companies can see synergy where markets wouldn’t. As an investor, if you’re able to take the industrial approach that these companies do, you can find value in the market,” he added.
European stocks dropped on Friday after US Secretary of State John Kerry warned Moscow that its intimidation of Kiev would cost it dearly.
“If Russia choose the path of de-escalation, the international community — all of us — will welcome it. If Russia does not, the world will make sure that the cost for Russia will only grow,” Kerry said.
National benchmark indices rose in nine of the 18 Western European markets this week.
In London, the FTSE 100 advanced 0.9 percent, while Germany’s DAX slipped 0.1 percent and France’s CAC 40 gained 0.3 percent. Markets were closed on Monday for the Easter holiday, with Iceland also shut last Sunday for a public holiday to celebrate the first day of summer.
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