By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks advanced Tuesday, with
the pan-European benchmark hanging at a six-year high, but
AstraZeneca PLC shares were stuck in the red after Pfizer Inc.
officially walked away from its pursuit of the British drug
maker.
The Stoxx Europe 600 index closed up 0.2% at 344.47 after a 0.6%
run higher on Monday following European parliamentary
elections.
European markets were additionally buoyed by "further dovish
remarks" by European Central Bank President Draghi who "highlighted
the risk of a negative spiral between low inflation, falling
inflation expectations and credit for the euro area," said
Guillermo Felices at Barclays asset allocation research, in a note
Tuesday. "We retain our call that the ECB will cut its policy rate
and/or announce targeted liquidity measures to support bank
lending," at the Governing Council's meeting on June 5.
On Tuesday, Belgium, the first euro-zone country to report
inflation data for May, said growth in consumer prices dropped to
the lowest level in more than four years, with an inflation rate of
0.36%. The Belgium BEL 20 stock index rose 0.3% to 3,153.97.
There were strong gains in the European parliamentary elections,
which ended Sunday, for anti-European Union and far-right parties,
reflecting widespread voter frustration over economic austerity and
lackluster growth. Overall, centrist, pro-European parties are
poised to hold a majority of the 751 seats in the legislature.
Investors "took the electoral success in stride. The duopoly of
the center-right and center-left will persist and still dominate
the EU parliament," said currency analysts at Brown Brothers
Harriman in a report Tuesday. "This will likely become clearer when
the new [European Commission] president and commission are put
together," they said. "The anti-EU vote is far from a unitary bloc.
They are a disparate collection of national parties."
Germany's DAX 30 index turned higher by 0.5% to 9,940.82, and
France's CAC 40 index moved up 0.1% to 4,529.75.
Aveva Group surged 8.8%, the best performer on the Stoxx 600,
after the British engineering data and design IT systems company
posted a 9% rise in 2014 pretax profit.
Trading resumed in the U.K. after Monday's Bank holiday. The
FTSE 100 rose 0.4% to 6,844.94, led by InterContinental Hotels
Group . Its shares climbed 3.1% after the owner of Holiday Inns,
Crowe Plaza and other hospitality chains reportedly said over the
weekend it rejected a GBP6 billion bid ($10.12 billion) from an
unnamed U.S. company.
But AstraZeneca PLC (AZN) dropped 1.8% after Pfizer Inc. (PFE)
officially walked away from its offer to buy the British drug maker
for $120 billion.
The increased bid came four weeks from the confirmation of
Pfizer's first offer, which was also rejected by AstraZeneca. U.K.
takeover rules gave the firms until Monday to enter takeover
discussions. Société Générale cut its rating on AstraZeneca to sell
from hold, and Panmure Gordon lowered its price target on the
company, according to Dow Jones Newswires.
Meanwhile, Russian stocks were knocked lower as dozens of
pro-Russian separatists were killed by Ukrainian forces in heavy
fighting at Donetsk International Airport. On Sunday, pro-Europe
chocolate baron Petro Poroshenko was elected as Ukraine's new
president. The blue-chips MICEX index fell 2.5%, and the RTS index
gave up 2.9%.
The political crisis in Ukraine slashed Russian lender VTB
Bank's first-quarter profit by 98% to 400 million rubles ($11.7
million).
Italy's FTSE MIB index tilted lower by 0.4% to 21,403.55 after
swinging between gains and losses. The index had been higher
following a report that consumer confidence in the country in May
rose to its highest level since January 2010.The MIB index on
Monday rallied 1.8%, led by bank stocks, after Italian Prime
Minister Matteo Renzi's center-left Democratic Party defeated a
challenge from a euroskeptic party headed by comedian Beppe
Grillo.
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