Shares rise on corporate results, M&A talk; euro flat

Reuters

By Herbert Lash

NEW YORK (Reuters) - Global equity markets rose on Tuesday, lifted by solid U.S. corporate earnings and deal-making activity among European drugmakers, while the euro edged above break-even.

On Wall Street, the S&P 500 and the Nasdaq posted a sixth straight session of gains, led by the healthcare sector. In Europe, an index of top European shares finished up 1.3 percent, the biggest daily advance since early March.

Netflix Inc, the video streaming company, surged 7.0 percent to $372.90 a day after it reported quarterly results that showed strong subscriber growth, a sign its shares could continue to rise despite valuation concerns.

One-fifth of the companies in the S&P index have reported first-quarter earnings so far, of which 63 percent beat analysts' expectations. The rate is in line with a 20-year average but down from the 66 percent average of the past four quarters.

"What was baked into the market, in spite of a market near an all-time high, was a sloppy earnings season," said Mike Serio, regional chief investment officer for Wells Fargo Private Bank in Denver.

"We've had some really good beats at this point, we've had a couple of good announcements today, you throw on the M&A activity in the drug sector, at least in the short term, everybody looks pretty excited about this market."

Healthcare stocks rose 1 percent, the best performing of the 10 major S&P sectors. Allergan Inc jumped 15.2 percent to $163.65 a day after activist investor William Ackman teamed up with Canadian drugmaker Valeant Pharmaceuticals International Inc to bid for the company.

Valeant gained 7.5 percent to $135.41 in New York trading.

The Dow Jones industrial average rose 65.12 points, or 0.4 percent, to 16,514.37. The S&P 500 gained 7.66 points, or 0.41 percent, to 1,879.55, and the Nasdaq Composite added 39.912 points, or 0.97 percent, to 4,161.458.

MSCI's all-country stock index rose 0.5 percent, while the FTSEurofirst 300 index of top European shares closed up 1.34 percent at 1,346.57 points.

AstraZeneca jumped 4.7 percent in London after the Sunday Times newspaper reported Pfizer approached its British rival with a 60 billion pound ($101 billion) takeover offer. Pfizer rose 1.2 percent to $31.23.

GlaxoSmithKline rose 5.2 percent after it agreed to sell its oncology products to Novartis for $14.5 billion (8.6 billion pounds), while buying the Swiss firm's vaccines, excluding flu. Novartis' shares were up 2.3 percent.

Investors trimmed their positions of U.S. dollars after a two-week run higher, unmoved by data on U.S. existing home sales for March that beat expectations but showed a modest decline from the prior month.

The euro gave up some of its modest gains, but remained slightly positive against the greenback and yen.

The euro slipped to a two-week low of $1.3783 at one point, before trading 0.09 percent higher at $1.3804.

ECB executive board member Benoit Coeure said on Tuesday that there was further margin to reduce the main interest rate below 0.25 percent and that the strength of the euro could be keeping inflation too low.

But until the ECB takes action, traders said the euro was unlikely to weaken much, thus keeping it tied to a range.

The dollar was up a bit against the yen at 102.62.

U.S. crude futures fell ahead of Energy Information Administration data expected to show that U.S. inventories have risen close to record highs. Brent also fell but was cushioned by continued concerns over the stand-off in Eastern Ukraine.

Brent crude settled down 68 cents at $109.27 a barrel, after reaching a six-week high of $110.36 last week. U.S. crude slipped $2.24 to settle at $102.13 a barrel.

Longer-maturity U.S. Treasuries prices rebounded at the end of the session. Benchmark 10-year Treasuries notes last traded 1/32 higher in price to yield 2.7151 percent.

(Reporting by Herbert Lash; Additional reporting by Marius Zaharia in London; Editing by Leslie Adler and Chizu Nomiyama)

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