European shares end near two-week high, helped by pharma M&A hopes

European shares rose slightly on Friday, nearing their highest level in over two weeks, as the market was supported by a rally in drugmakers on hopes of tie-up activity in the sector. Actelion surged 16.8 percent to a record high after the Swiss biotechnology firm confirmed a report of a take-over approach from Johnson & Johnson, which also said discussions were under way.
Actelion, which has been seen as a potential takeover target for years, said there was no certainty a deal would be reached, while analysts also expressed some scepticism about the willingness of its founder and CEO Jean-Paul Clozel to sell. "We continue to believe that management ... remains committed to Actelion as an independent company," Barclays said, while Exane said a successful buyer would need to pay more than 200 CHF per share, a price above Friday's close.
Actelion's jump helped the STOXX Europe 600 Healthcare index to advance 1.4 percent, the top sector gainer in Europe as traders bet there could be further M&A in the sector. The pan-European STOXX 600 index ended up 0.2 percent. It gained 1 percent this week after rising in the previous two weeks. The index is up 2.3 percent since Donald Trump's surprise victory in the US presidential election.
Philippe Gijsels, head of research at BNP Paribas Fortis, said the market could pull back. "After rallying strongly in the past weeks, European equities have become vulnerable to some profit-taking. The largest risk for the stock markets is Trump not delivering on his lofty promises," he said.
Gains in the broader market were capped by weaker commodities stocks. The European oil and gas index fell 0.6 percent, as oil prices were dragged down by uncertainty over whether the Organisation of the Petroleum Exporting Countries will reach an output deal. Miners fell 0.9 percent on a drop in major industrial metals, with Anglo American and Glencore both declining more than 1.5 percent.
Elsewhere, Daily Mail and General Trust slumped 4.3 percent after Barclays lowered its rating on the stock to "underweight" from "equal weight" and cut its target price to 705 pence from 715 pence. Italian bank Monte dei Paschi di Siena fell 13 percent on doubts it would find buyers for a 5 billion-euro share sale that is expected to be launched just after a referendum on Prime Minister Matteo Renzi's constitutional reform plan.