Archive for April, 2009

Swine flu fears grip world markets (AP)

Monday, April 27th, 2009 | Finance News

LONDON – Airlines and travel companies led world stock markets lower Monday as investors worried that a deadly outbreak of swine flu in Mexico could go global and derail any global economic recovery, though pharmaceutical companies rallied on expectations that demand for anti-viral drugs may surge to deal with any pandemic.

Investors are fretting that a flu outbreak could set back already-enfeebled global trade and travel, just at a time when policy-makers around the world have begun sounding more optimistic about the global economy's prospects.

"On top of a synchronized global financial and economic crisis, an outbreak of swine fever is the last thing we need just now," said Neil Mackinnon, chief economist at ECU Group.

By early afternoon London time, the FTSE 100 index of leading British shares was down 41.63 points, or 1 percent, at 4,114.36, while Germany's DAX fell 65.66 points, or 1.4 percent, to 4,608.66. The CAC-40 in France was 44.17 points, or 1.4 percent, lower at 3,058.68.

Wall Street was poised to give up most of the gains it made on Friday. Dow futures were down 129 points, or 1.6 percent, at 7,927, while the broader Standard & Poor's 500 futures fell 13.5, points, or 1.6 percent, to 853.

Earlier, most of Asia's markets were hit by the pandemic fears, with Hong Kong — one of the main focal points of the SARS virus concerns just six years ago — closing down 418.43 points, or 2.7 percent, to 14,840.42. Japan's Nikkei 225 stock average managed a gain of 18.35, or 0.2 percent, to close at 8,726.34 in back-and-forth trade.

Airlines and travel companies took the brunt of the selling amid concerns passengers could hold back from flying for fear of catching the virus, which has already reportedly spread as far as New Zealand.

In Europe, Deutsche Lufthansa AG fell 10 percent, while British Airways PLC was down more than 8 percent. Earlier, Australia's Qantas Airways fell 4 percent while Hong Kong-based Cathay Pacific Airways slid 8 percent.

Travel and hotel companies were also heavily sold off, with British cruise line firm Carnival PLC down more than 7 percent and German travel company TUI AG slid more than 4 percent as it revealed that it was suspending all trips to Mexico City as a precaution amid the outbreak of a deadly strain of swine flu.

While airlines and travel-related companies tanked, pharmaceutical companies enjoyed a modest rally in falling markets amid expectations that demand for anti-viral drugs would rise. Both Swiss drugmaker Roche Holding AG — the maker of Tamiflu — and GlaxoSmithkline PLC, which manufactures the Relenza drug, rose 4 percent.

Mexico officials say the flu strain may have sickened 1,614 people since April 13 but laboratory testing to confirm that and how many truly died from it — at least 22 so far out of the 103 suspected deaths — is taking time.

Worries about the epidemic's spread will likely remain at the forefront of investors' mind over the coming days and overshadowed any hopes generated over the weekend by the announcement from the Group of Seven finance ministers that the worst of the world recession may be over and that recovery may emerge by the end of the year.

"Market worries over a flu pandemic have drawn attention away from ministerial meetings that took place over the weekend," said Stephen Lewis, an analyst at Monument Securities.

Hopes that a recovery of sorts is on its way has helped world stock markets rally off multiyear lows in early March. Despite some range trading over the last couple of weeks, stocks began to rally strongly again at the end of last week, with the Dow Jones industrial average, for example, advancing 1.5 percent to 8,076.29 on Friday.

Elsewhere in Asia, Australia's stock measure gained 0.5 percent while Shanghai's fell 1.8 percent. Markets in Singapore, Taiwan and India retreated.

Oil prices dropped sharply as investors considered comments from OPEC suggesting the price was too low for companies to justify new investments in crude production. Benchmark crude for June delivery fell $2.50 to $49.05. The contract jumped $1.93 to settle at $51.55 last week.

In currencies, the dollar weakened to 96.64 yen from 97.17 yen. The euro traded lower at $1.3125 from $1.3161.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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Flu a windfall for some drugmakers, shares jump (Reuters)

Monday, April 27th, 2009 | Finance News

LONDON (Reuters) –
The threat of a pandemic triggered by a new flu strain that has killed more than 100 people in Mexico will provide a windfall for some makers of drugs and vaccines.

Switzerland's Roche Holding AG (ROG.VX) and Britain's GlaxoSmithKline Plc (GSK.L) are the two big pharmaceutical groups set to benefit most as governments and corporations step up orders for their drugs Tamiflu and Relenza.

Shares in the two companies rose 4 and 3 percent respectively in early trade on Monday, while stock in Australia's Biota Holdings Ltd (BTA.AX), which licensed Relenza to Glaxo, soared 82 percent.

But analysts cautioned that the commercial impact would be muted by the fact that many governments had already placed substantial stockpile orders because of the previous threat posed by avian flu.

"There is certainly a perceived benefit and there probably will be some actual benefit, but not as much as the first time round with avian flu," said Jeff Holford, an industry analyst at stockbroker Jefferies.

Relenza, known generically as zanamivir, and Tamiflu, or oseltamivir, have both been shown to work against the new flu strain, which has spread to the United States and as far as New Zealand.

Roche said it was working on scaling up production of Tamiflu but noted that the lead time for the drug from synthesis of the product to packaging was eight months.

"We are in the process of reinstating our activities and checking all the processes to see how we can scale up," a spokeswoman said.

"We've always made it clear that this cannot happen overnight.

The World Health Organization (WHO) has not yet asked Roche to deploy 3 million treatment courses it has as a "fire blanket" to use wherever a pandemic breaks out, she added.

The WHO also has an additional 2 million packs that Roche donated in the past for use in countries which are not so well prepared for a pandemic.

Demand has historically been greatest for Tamiflu, which is given as a convenient tablet, while Relenza must be inhaled.

Recently, though, Glaxo's product has been winning more business as buyers diversify their medicine reserves. In the first quarter of 2009 sales of Relenza into government stockpiles -- notably Britain and Japan -- outstripped those for Tamiflu.

Tamiflu was originally invented by U.S. biotech company Gilead Sciences Inc (GILD.O).

The flu outbreak, which poses the biggest risk of a large-scale pandemic since avian flu surfaced in 1997, will also fuel demand for vaccines from major producers like Sanofi-Aventis SA (SASY.PA), Glaxo, Novartis AG (NOVN.VX) and Baxter International Inc (BAX.N), although making shots against the new strain will take months.

Shares in U.S. biotech company Novavax Inc (NVAX.O), which is working on new types of vaccines, jumped 75 percent on Friday.

(Reporting by Ben Hirschler; Editing by Greg Mahlich and Hans Peters)

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World stocks, oil tumble as flu fears spread (Reuters)

Monday, April 27th, 2009 | Finance News

LONDON (Reuters) –
World stocks tumbled on Monday, after seven weeks of gains, and oil and the euro fell as concerns intensified the spread of swine flu, which has killed more than 100 people in Mexico, would hit the global economy.

Travel and leisure-related stocks tumbled while the Mexican peso fell 2 percent against the dollar as the World Health Organization warned the flu, which has spread to the United States and possibly as far as New Zealand, has the potential to cause a worldwide pandemic.

"A nasty chill will run through the market with swine flu as people think back to the SARS virus," said Justin Urquhart Stewart, investment director at Seven Investment Management.

"The threat of the pandemic will add further weakness to global trade -- we saw with SARS tangible percentage points knocked off the index and that was in a buoyant time. Put that in a weaker time and it is likely to be more unpleasant." MSCI world equity index (.MIWD00000PUS) fell 0.7 percent after rising 0.2 percent last week, posting seventh weeks of consecutive gains.

The FTSEurofirst 300 index (.FTEU3) dropped 1.3 percent while emerging stocks (.MSCIEF) lost 1.4 percent.

In Europe, travel and leisure sector stocks (.SXTP) fell 4.5 percent while airlines such as British Airways (BAY.L), Air France-KLM (AIRF.PA) and Deutsche Lufthansa (LHAG.DE) dropped up to 13 percent.

U.S. crude oil fell 4.1 percent to $49.45 a barrel.

The euro fell 0.7 percent to $1.3148, hit by a rise in risk aversion, while the dollar (.DXY) rose 0.6 percent against a basket of major currencies. The yen rose to 0.2 percent to 96.70 per dollar.

"If the disease proves to be more fatal, the dollar would rally and cross-yen would come under pressure," BNP Paribas said in a note to clients.

"Given the recent 'green shoots', the market would take any worsening of the outbreak as an obstruction to the global recovery process."

The Mexican peso fell as low as 13.69 per dollar, its lowest in almost three weeks.

The June Bund future rose 75 ticks, garnering safety-seeking flows.

Two-year euro zone government bond yields hit their lowest in almost one month of 1.303 percent after European Central Bank Governing Council member Nout Wellink was quoted as saying the central bank should discuss lowering interest rates below 1 percent.

(Additional reporting by Joanne Frearson, editing by Mike Peacock)

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