GSK boosted as rival fears recede

LONDON FTSE 100 CLOSE 5,642.62 -2.01

GLAXOSMITHKLINE led the FTSE 100 yesterday as fears eased over the threat posed by cheap generic drugs to one of its star performers.

The pharmaceutical giant rose on news that Novartis handed back US rights to a drug to UK group Vectura – thought to be a generic version of GSK's lung drug Advair.

Analysts had been expecting Advair to experience falling revenues from 2012 onwards because of the rival treatment, but signalled yesterday that the move by Novartis suggested this was unlikely.

GlaxoSmithKline led the risers board with a gain of 47.5p to 1,272p while small-cap Vectura fell 24 per cent to 48.25p.

Elsewhere in London, the benchmark FTSE 100 slipped as banks and miners fell after investors took profits after recent gains. The index of Britain's leading public companies closed down 2.01 points at 5,642.62.

IG Index strategist Anthony Grech said: "It appears that an element of profit-taking has overcome investors as the previously buoyant mining and bank sectors find themselves raided. Investors generally seem content to bank recent gains for now."

Banking shares dominated the fallers' board, with Royal Bank of Scotland and Lloyds Banking Group among the worst hit, down 1.6p to 42p and 1.8p to 55.6p, respectively.

HSBC slid 11.8p to 681p and Barclays was down 6.5p to 352.9p as Citigroup brokers downgraded their ratings on the global financial sector and said it could become a "problem child".

Mining companies dropped as the dollar rose against most currencies, including sterling. Vedanta Resources was the sector's biggest casualty, down 65p to 2,706p.

Oil and gas exploration company BG Group rose 18p to 1,191p on vague rumours of interest from ExxonMobil.

The mid-cap FTSE 250 index closed down 4.32 points at 10,004.18, having reached its highest level since midway through 2008 on Wednesday.

Premier Farnell, the Leeds-based electronics components distributor, jumped after it reported that fourth-quarter profits were 23 per cent of the same time a year earlier and ahead of expectations. The results prompted a string up upgrades, with RBS raising its 2011 and 2012 forecasts.

KBC Peel Hunt commented that "continuing gross margin stability, strong cash conversion and improving year-on-year sales trends indicate a much improved trading environment for Premier Farnell and we look forward to seeing momentum build".

Shares in the FTSE 250 group closed up 19.7p or 9.8 per cent at 220p.

Glasgow-based engineering group Weir eased despite an upgrade from RBS, which said the company's recent results proved how resilient its business model was, raising the target price on the shares from 738p to 1,037p. But Weir shares closed down 4.5p at 943.5p.

Bakery chain Greggs rose after raising its dividend for the 25th year in a row. Shares in the Newcastle company, which sells millions of sausage rolls each week, closed up 4.2 per cent at 455.3p.

Transport companies continued to rise in the wake of Arriva confirming a takeover approach. Arriva rose a further 4.6 per cent to 708p, as suitor Deutsche Bahn formally confirmed bid talks with the company yesterday.

Elsewhere in the sector, Stagecoach climbed 3 per cent and FirstGroup rose 1.4p to 380.9p.

Insulation group SIG dropped 9 per cent to 116.1p, after revealing that it had lost 30 million in sales due to the recent cold weather, which hit its first-half profits.