European pharmaceuticals stocks received an early tonic from premature reports that George W. Bush had booked a four-year term at the White House.
But as the dust settled, analysts reflected that investors' hopes for a Republican win had more to do with sentiment than reality.
Birgit Kulhoff, pharmaceuticals analyst at Lombard Odier private bank in Zurich, said: "Some people believe that if Bush wins, there will be less impact from price pressures on the drugs bill. But even if Gore does become president, the composition of the Senate and Congress will ensure that any impact is minimal."
Anthony Butler at Lehman Brothers said: "We know the equity markets would appreciate Bush's free-market plan to provide reform to Medicare recipients over Gore's entitlement plan. Our analysis of industry peak sales vis-a-vis product launches indicates that a productivity deceleration in 2000 will be followed swiftly by productivity acceleration in 2001 and 2002.
"Recognition of this, especially after the political pressure is clearer, may very well lead investors to higher revenue growth forecasts."
UK pharmaceutical companies, with heavy exposure to the US market, were among the biggest beneficiaries of the bounce for the sector. In France, Aventis rose 2.9 per cent to €86.40 and Sanofi Synthelabo edged up 0.6 per cent to €62.85. The Swiss pharma majors, which have limited exposure to the US, were more restrained. Nonetheless, Novartis put on 1.4 per cent and Roche certificates gained 0.7 per cent.
The prospect of a Republican administration also gave a boost to European tobacco stocks. Mr Bush has pledged that the US Justice Department would drop a huge lawsuit against a group of US tobacco companies if he is elected. Spain's Altadis rose 1.2 per cent to €17.11.
Carrefour peeled off steeply after brokers responded to soft sales figures from France's top supermarkets group with blanket downgrades.
The shares were also hit by acquisition rumours, although Carrefour has repeatedly denied any interest in Dutch retailer Laurus, which had another strong run yesterday amid talk of an impending takeover bid.
Carrefour's October sales sparked rating downgrades at Dresdner Kleinwort Benson and HSBC while Schroder Salomon Smith Barney trimmed its target price to €75 from €80. There was also negative comment from Deutsche Bank.
