Drugmakers suffer as price fixing investigation launches

European shares slumped on Friday, weighed down by weaker drugmakers after two US politicians called on federal antitrust regulators to open an investigation into possible price fixing in the industry.

The pan-European Stoxx 600 index was down 0.8 per cent at its close, marking its biggest weekly fall since February. The index has been hit by growing jitters ahead of the US presidential election on Tuesday and has been trading near its lowest levels since July.

DUBLIN

Irish shares had been largely cushioned during the week from much of the turmoil across European markets as investors cheered solid trading updates from Smurfit Kappa, Kerry Group, Glanbia and Paddy Power Betfair. The Iseq index closed down just 0.07 per cent on Friday at 5,919.05.

Paddy Power Betfair advanced 4.5 per cent to €100.50 after the bookmaking group raised its full year earnings forecast, bolstered by the Euro 2016 football tournament and sterling weakness, which added £28 million (€31.5 million) to the value of overseas earnings converted into pounds.

Banking stocks were also in demand, with Permanent TSB advancing 4.9 per cent to €2.54, while Bank of Ireland added 0.5 per cent to 19.8c. Lenders across the UK and Ireland received a boost on Thursday when the British High Court ruled that the UK cannot press the Brexit button without with parliament's support.

However, Smurfit Kappa lost 2.9 per cent to €20.31 as some traders chose to lock in profits following the stock’s strong advance over the two previous sessions after the paper packaging group posted better-than-expected quarterly figures.

Ryanair was also out of sorts, falling 1.2 per cent to €1.21, as investors positioned themselves ahead of half-year results from the carrier – mindful of its recent profit warning.

LONDON

Britain’s top share index hit a seven-week low on Friday and registered its biggest weekly loss in 10 months as drugmakers came under pressure from political scrutiny in the US ahead of its November 8th elections.

The blue-chip FTSE 100 index closed 1.4 per cent weaker after falling to its lowest level since mid-September. The benchmark index fell more than 4 per cent for the week, the biggest weekly drop since January.

Two US politicians called on Thursday for an investigation into whether major pharmaceutical firms colluded to set prices for insulin and other diabetes drugs.

Drugmaker Hikma Pharma, down 6.8 per cent, was the worst performer in the FTSE 100 index, with HSBC highlighting the risk that the company could be dragged into the inquiry.

Miners also slumped after a fall in some metals prices. The UK mining index tumbled 2.3 per cent, dragged down by a 1.8- 4.6 per cent drop in BHP Billiton, Anglo American, Randgold Resources and Fresnillo.

EUROPE

Germany’s Dax index fell by 0.7 per cent and the Cac 40 in France dropped by 0.8 per cent, as market concern over the US vote spread across Europe.

Among individual stocks, France's Richemont rose 5.2 per cent after the luxury goods group announced a management revamp in the wake of a drop in net profit in the six months to September, driven by one-off restructuring charges and product buy-backs.

Ubisoft soared 8.6 per cent, as Kepler Cheuvreux upgraded the French game developer to buy after the company lifted its operating profit target.

Shares were boosted at cosmetics giant L’Oreal, whose sales growth beat expectations.

But French outdoor advertising company JC Decaux fell nearly 10 per cent after it said organic revenue growth would turn negative in the final quarter of the year and affect margins.

Erste Group Bank sank after Austria's biggest bank forecast lower profitability next year. Commerzbank slipped after the German lender swung to a loss in the third quarter.

NEW YORK

US stocks were back in positive territory in early afternoon trading on Wall Street after the longest slide since 2008 sent equities to levels considered cheap by technical analysts. The dollar fell as anxiety over the election offset data showing progress in the labour market.

“People are reaching the point of exhaustion in regards to the craziness around the news about the election,” said Mark Heppenstall, the Horsham, Pennsylvania-based chief investment officer of Penn Mutual Asset Management. “I wouldn’t read too much into this bounce back” in stocks.

The S&P 500 rose 0.5 per cent by early afternoon, while the Dow Jones Industrial Average added 0.3 per cent and the Nasdaq Composite Index increased 0.6 per cent.

Among shares moving on earnings news, NRG Energy surged the most since 2008 after raising profit guidance for 2016. Mohawk Industries jumped 7.8 per cent on the way to its best one-day gain in five years after the flooring maker's results topped estimates.

– Additional reporting: Reuters and Bloomberg