European Markets Down as AstraZeneca and Dt Bank Slide

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European Markets Down as AstraZeneca and Dt Bank Slide

European stocks caved in on Monday under the weight of drug maker AstraZeneca, which plunged after dismissing a Pfizer acquisition bid and Deutsche Bank, with the injection of additional capital having an impact on lenders stocks.

The pan-European FTSEurofirst 300 gauge dropped 0.9% to 1,349.79 points midway through the trading session, hitting its lowest level in about two weeks. The euro zone benchmark index Stoxx 50 was also down 1% at 3,140.41 points.

AstraZeneca plunged 12% to lead losses in the FTSEurofirst 300, after it rejected a more attractive cash-and-stock deal takeover attempt by Pfizer, casting doubts over capacity of the US pharmaceutical firm to successfully form the world’s biggest drug-making company, Reuters reported.

“Despite Pfizer having spent a large amount of money and time, the signal seems clear from AstraZeneca’s board of directors, UK politicians and mainstream media that this is a bad deal, and we see limited efforts from Pfizer going forward,” Peter Garnry of Saxo Bank said.

Novartis AG slid 0.4%.

Deutsche Bank lost 1.9% after it announced intentions to generate up to 8 billion euros in additional capital.

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The flop of Deutsche Bank’s stock pulled the Stoxx 600 Bank Index down 1.7%, with some investors and analysts anticipating that other lenders will follow suit and add capital to boost their balance sheets.

However, investors are still hopeful that European equities will improve.

AXA Investment Management’s top investor manager Richard Marwood said that the probability that the European Central Bank could reign on interest rates in June provided a level of safety to stocks, since a reduction in rates would dwindle proceeds from bonds and make equities seem more attractive.

According to Bloomberg, the FTSE 100 of UK plunged 0.1%. Yet, 10 out of the 18 blue-chip indexes in western-European markets gained today. CAC 40 of France went up 0.3% while DAX of Germany ascended 0.3%.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com