By Sarah Turner, MarketWatch
LONDON (MarketWatch) - Drugmakers helped London shares finish the week on an upbeat note, with GlaxoSmithKline and AstraZeneca rising on a combination of pipeline news and analyst comment.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.32% closed up 1%, or 55.80 points, to 5,947.10. Other European shares also gained ground, shrugging off weaker-than-expected jobs data from the U.S. See Europe Markets.
"The recessionary trend is there for all to see with worse-than-expected figures, but the market was braced for bad news and seems to be holding up well," said Martin Slaney, head of derivatives at GFT Global Markets.
Shares of pharmaceutical companies helped London stocks to stay in positive territory even after the U.S. data was published.
Shares of AstraZeneca /zigman2/quotes/200304487/composite AZN +1.02% /zigman2/quotes/203048482/delayed UK:AZN -0.03% climbed 2.9%, while shares of GlaxoSmithKline /zigman2/quotes/209463850/composite GSK +0.76% /zigman2/quotes/200381158/delayed UK:GSK -0.07% rose 1.3% and Shire shares climbed 0.9%.
In addition, shares of hip-implant maker Smith & Nephew /zigman2/quotes/203117274/composite SNN +0.30% /zigman2/quotes/207176500/delayed UK:SN -0.87% added 1.2%.
Both GlaxoSmithKline and AstraZeneca revealed positive news on their drug pipelines this week. GlaxoSmithKline said late Thursday that U.S. regulators approved infant vaccine Rotarix. Shares of AstraZeneca extended the week's gains after the company said it will stop a trial of its cholesterol blockbuster drug Crestor early due to positive preliminary results.
Bear Stearns analysts also took a look at the potential impact of foreign-exchange moves on these companies, saying: "Fluctuations continue to have a major impact on the pharmaceutical sector."
They said that the weak dollar is expected to have a substantial impact on first-quarter earnings, with U.S. dollar reporters such as AstraZeneca likely to continue to benefit from weakness in the currency, while recent sterling weakness against rivals including the euro implies earnings upside for GlaxoSmithKline.
The Bear Stearns analysts are estimating a 5.3% currency benefit for GlaxoSmithKline's top line in the first quarter.
Sterling recently traded down 0.1% at $1.9941 against the dollar. See Currencies.
Nuclear-power plant operator British Energy was a standout gainer Friday as its shares rose 7.3%.
A French newspaper reported that the board of French utility EdF /zigman2/quotes/201783867/delayed FR:EDF 0.00% has approved a full takeover bid for the U.K. company partly owned by the British government. The La Tribune report didn't say how much EdF was willing to offer.
Analysts at Evolution Securities said that the probability of a consortium bid was increasing.