Elan tumbles on news of failed drug trial for Janssen
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stocks pushed ahead in choppy summer markets Tuesday, with oil stocks providing support, as the broader market brushed aside a clutch of negative economic data and heavy losses for Standard Chartered PLC.
The Stoxx Europe 600 index XX:SXXP +0.44% rose 0.5% to 268. The prior day, the index rose 0.5% as markets continued to gain on hopes that Spain will request a full bailout, making it possible for the European Central Bank to buy Spanish bonds.
A top mover in the index was Standard Chartered UK:STAN -17.89% HK:2888 -14.89% off 23%, tracking heavy losses in Asia, after a New York regulator accused the bank of colluding with Iran to hide at least $250 billion in transactions. See: StanChart dives after Iran allegations, downgrades.
Gains for some peripheral regional indexes stood out. The Greece ASE Composite index GR:GD +2.04% rose 2.4% to 622.75, with National Bank of Greece SA NBG +0.61% GR:ETE +5.43% up 4.7%. Betting group OPAP SA GR:OPAP +2.72% rose 3%.
Portugal’s PSI 20 index PT:PSI20 +2.58% gained 2%, driven largely by energy-related companies, with Galp Energia SGPS SA PT:GALP +2.19% up 3.5% and EDP-Energias de Portugal SA PT:EDP +1.32% rising 3.2%. Crude-oil prices also tracked higher in afternoon trading.
U.S. stock-market futures also pointed higher.
Stephen Pope, managing partner at Spotlight Ideas, said there are five factors at play for markets: poor economic data, mixed earnings, exogenous news such as Standard Chartered’s, a lack of clarity over the euro zone and a ”vacation vacuum.”
“Given the recent volatility and the patchy market participation, given vacations are in full force. it is not a surprise at all to see any territory gained one day, cashed in for profit the next,” said Pope, who answered questions via email. “This is not the time to be either bullish or bearish, but to be skeptical. With that in mind, profits windows will close as quickly as they open.”
Economy data had jarred the market earlier. U.K. manufacturing output saw a 2.9% fall in June, the biggest since November 2008, owing in part to an extra holiday for Queen Elizabeth’s Diamond Jubilee. See Market Pulse for further details on the U.K. manufacturing data .
Italy reported a 0.7% fall in economic growth for the second three months of the year after a 0.8% contraction in the prior quarter. Topping it off, German factory orders in June fell a steeper-than-expected 1.7%.
Even as other markets bounced back from earlier losses, the FTSE 100 index UK:UKX +0.06% remained largely flat at 5,815.60 as Standard Chartered weighed. Gains for energy stocks provided support, with BP PLC BP +2.01% UK:BP +2.00% up 2% and BG Group PLC UK:BG +2.38% adding 1.3%.
Mining stocks also supported the index, with Xstrata PLC UK:XTA +1.86% up 2.7% after beating the market with first half net profit of $1.94 billion and declaring an interim dividend that was up 8% on the year. Xstrata defers capital as profit falls
Shares of International Hotels Group PLC UK:IHG +6.91% surged 8% after the hotel operator said it would return $1 billion to shareholders as it posted a rise in second-quarter profit.
The French CAC 40 index FR:PX1 +1.07% had a volatile day, but rebounded 1.2% higher to 3,442.36, as Total SA FR:FP +2.17% TOT +2.20% rose over 2%, alongside other energy stocks. Banks shed earlier losses to support the index, with Credit Agricole SA FR:ACA +3.43% up 3.5% and Societe Generale SA FR:GLE +1.90% gaining 2.4%.
Among insurers, AXA SA FR:CS +3.87% topped gainers in Paris with a nearly 4% rise. In Frankfurt, Munich Re AG DE:MUV2 +1.33% rose over 1% after reporting it’s on track to beat its prior full-year guidance for profit and sales as second-quarter profit rose on lower costs for weather claims, lower taxes and the absence of impairments on Greek sovereign debt. See: Munich Re profit up.
Also in Frankfurt, utilities E.On AG DE:EOAN +3.02% and RWE AG DE:RWE +2.00% rose 2.2% and 1.7%, respectively, helping prop up the German DAX 30 index DX:DAX +0.61% , up 0.6% to 6,959.52.
Chemicals group BASF SE DE:BAS +1.21% rose 1.4%, but elsewhere in the sector, shares of Lanxess AG DE:LXS -1.70% fell 2% its profit expectation for the year disappointed some analysts, though.
Among big decliners in Europe, shares of Elan Corp. IE:DRX -10.39% ELN -7.02% sank 12% after Pfizer Inc. PFE -1.53% and Johnson & Johnson JNJ -0.33% said they were halting an intravenous treatment for patients with mild to moderate Alzheimer’s disease after the failure of a clinical trial. Pfizer and J&J unit Janssen Alzheimer Immunotherapy had partnered on developing the treatment.
Elan has an almost 50% stake in Janssen and said it would take a related charge of $117.3 million in the third quarter.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
