Pharmaceuticals hit by warning of slow growth

Pharmaceuticals were depressed by Deutsche Bank's shift in portfolio weightings which reduced its overweight stance in the sector.

Goldman Sachs added to the pressure by cautioning that valuations in Europe and the US were looking stretched in light of the bounce-back on Nasdaq.

The US investment bank warned that the sector's earnings growth profile was slowing to an expected 11 per cent for the next five years, against 14 per cent in the previous five.

France's Aventis dropped 5 per cent to €84.45 while Sanofi- Synthelabo tumbled 7.9 per cent to €62.25. Roche certificates fell 2.8 per cent to SFr16,980 while Novartis lost 4.3 per cent to SFr2,822.

German pharma group Schering lost 3.2 per cent to €57.92 while the Anglo-Swedish AstraZeneca fell 4.5 per cent to SKr462.50.

Investors were lured back to financials by the prospect of lower interest rates.

Deutsche Bank sees most value in the wholesale/investment banking segment, given the battering it has taken recently. "While it is probably premature to buy aggressively, we believe they will respond more favourably to falling US interest rates in the first half of 2001," the bank said.

Societe Generale led the French banking pack with a rise of 5.1 per cent to €65.40, while UBS picked up 3 per cent to SFr259. Deutsche Bank, Germany's largest bank, was up 5.8 per cent at €91.50 and Dresdner Bank put on 3.8 per cent to €46.80. Commerzbank added 2.7 per cent at €30.40 but HypoVereinsbank dipped 1.2 per cent at €56.90.

Shares in German financial services group MLP shot up 18.1 per cent to €121.01 on reports that the bank, which focuses on wealthy clients, would expand its branch network.

This week's shakeout for the commodity price finally caught up with the oil sector, sending leading stocks smartly lower. Brent Blend has tumbled an eighth in four days and at $28 a barrel for January is now back to within sight of the $25 that most brokers have long predicted will be the average price for 2001. Royal Dutch and Total Fina Elf both fell almost 6 per cent to €63.83 and €148.60 respectively to send the sector to the bottom end of the FTSE 300 performance charts.