GlaxoSmithKline is making the most of the flu pandemic. Its shares rose 57p to £11.11½p making an 8 per cent gain on the week as it said that it had started developing a new potential vaccine for the flu bug and expected to have the first doses ready in four to six months.
The drug group was also spurred by a positive note from Morgan Stanley which upgraded from “sell” to “hold”, saying the shares had fallen too far in the year so far on worries about delays to its Cervarix drug for cervical cancer and said it liked its strategy of diversifying by buying smaller biotech companies.
AstraZeneca, its fellow pharmaceutical group, was given a 112p boost to £26.29 by UBS raising its target from £28 to £31, saying that five potential drugs in development could double its forecast earnings between 2014 and 2016.
But the FTSE 100 ended down 19.92 at 4,441.95 with traders reluctant to take positions as uncertainty continued over whether the economy had bottomed.
A rise in the pharmaceutical sector was compensated by falls in financials and commodity stocks as investors who had spent the week betting that the rising economic strength of China would bolster commodity prices, took profits.
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Man Group, the world’s largest hedge fund, was the top performer, up 17p at 282¾p on strong volume. Some traders suggested this was because it was about to sell its 18.6 per cent stake in MF Global. But this is worth a mere £80 million — less than 2 per cent of Man’s market value. More likely was that positive sentiment in the asset management sector, triggered by BlackRock’s £8 billion purchase of Barclays Global Investors.
Barclays lost 12½p to 292p as analysts cautioned that the widely trailed disposal would dilute the banks’ future earnings.
Vedanta Resources fell 148p to £15.99 as it issued $1.25 billion worth of bonds convertible into shares in 2016, which it said it would use to increase its stake in some of its subsidiaries. The Indian miner tore up an earlier plan to raise its stake in a subsidiary after rebel shareholders objected.
BT Group rose 3.8p to 96.8p as it was upgraded from “neutral” to “buy” by Merrill Lynch, which said its shares had fallen too far, given that worries over its Global Services Division were priced-in.
In the FTSE 250 Novae, the Lloyd’s insurer, lost 13½p to 360p amid concerns it would be liable for some of the losses generated by the Air France crash since its specialism is aviation insurance.
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RBS analysts said: “The Air France plane crash will be a costly airline disaster for the insurance industry and the Lloyd’s market will have a share of it.” But it added that many of the Lloyd’s insurers might benefit longer term because premium rates could rise by up to 20 per cent as a result. Its rival, Chaucer, was flat at 43p after Brit Insurance surprised no one by saying it was eyeing an all-share bid.
Berkeley Group lost 29p to 766p as Saad Group sold more of its stake.
• New York: Stocks headed towards a muted end to the week after hitting the highest close of the year on Thursday. But a late surge before the close in banks, consumer and high-tech stocks took the Dow Jones industrial average up 28.34 points to 8,799.26.