GSK, AZN higher as pharma sector gains on flu fears

European equities markets were mixed Monday as the pharmaceuticals sector saw gains on hopes that there is money to be made from the swine flu outbreak which originated in Mexico and has spread to the US, Canada and Europe, but stocks related to travel declined on concerns that people will stay home on fears that travel could increase their chances of contracting the flu.

In the UK, GlaxoSmithKline (LSE: GSK; NYSE: GSK) added 5.67 percent to lead the FTSE 100 while AstraZeneca (LSE: AZN; NYSE: AZN) was up 3.72 percent.

Swiss drug maker Roche (SIX: ROG), which makes the flu drug Tamiflu, said to be successful in treating the strain of flu that originated in Mexico, was up 3.5 percent while Sanofi-Aventis (Euronext: SAN; NYSE: SNY) added 2.43 percent on the CAC-40.

Airlines topped losers on the CAC-40, the FTSE 100 and the Dax as Air France-KLM (Euronext: AF; NYSE: AKH) fell 6.56 percent, British Airways (LSE: BAY; NYSE: BAB) was down 7.75 percent and Lufthansa (FWB: LHA) dropped 9.25 percent.

Other travel-related shares were also lower as cruise ship operator Carnival (LSE: CCL; NYSE: CCL) was down 6.81 percent in London, travel planner Thomas Cook Group (LSE: TCG) fell 4.42 percent, and among hotel operators InterContinental Hotels Group (LSE: IHG; NYSE: IHG) was 4.24 percent lower and Accor (Eurofirst: AC) dropped 3.72 percent.

In London, the FTSE 100 was up 0.27 percent to 4,167.01 but the FTSE 250 was 1.22 percent lower to 7,279.92, while the FTSE Eurofirst 300 added 0.53 percent to 814.67 and the Dax gained 0.42 percent to 4,694.07 but the CAC-40 fell 0.01 percent to 3,102.43 and the IBEX dropped 1.25 percent to 8,777.

Markets in the Asia-Pacific region were mixed as well.

Tokyo’s markets were higher on gains in the pharmaceuticals sector after Chugai Pharmaceutical (TYO: 4519), which sells its partner Roche’s Tamiflu flu drug, added 14 percent.

Banks were up on the possibility that Shinsei Bank (TYO: 8303) and Aozora Bank (TYO: 8304; FWB: AON) will merge; Shinsei was up 15 percent while Aozora added 16 percent on the session.

As in Europe, airlines declined on fears that flu concerns will mean fewer travelers, with Japan Airlines (TYO: 9205) down 4 percent while All Nippon Airways (TYO: 9202) fell 5.2 percent.

Yarn manufacturer Chuo Corp (TYO: 3207) plummeted 73 percent after it declared bankruptcy last week.

Other gains in the region included India’s Sensex with a gain of 0.38 percent to 11,371.85 while in Australia the S&P/ASX200 was up 0.52 percent to 3,731.6 and the Sydney Ordinaries added 0.59 percent to 3,690.

The Kospi was down 1.05 percent to 1,339.83, the Shanghai Composite fell 1.77 percent to 2,405.35, the Straits Times Index was 1.85 percent lower to 1,818.61, the Hang Seng was down 2.74 percent to 14,840.42 and the Taiex dropped 2.99 percent to 5,705.05.

New York markets were lower in early afternoon trade, with the Dow Jones Industrial Average down 0.25 percent to 8,056.22 while the Nasdaq Composite was 0.4 percent lower to 1,687.55 and the S&P 500 had dropped 0.54 percent to 861.56.

US airlines were lower, hurt by fears that flu concerns will curtail travel, but also by a downgrade of several airlines by UBS, which cut its recommendation on the air carriers from “buy” to “neutral”.

AMR (NYSE: AMR), the parent company of American Airlines, was down 12.18 percent while Continental Airlines (NYSE: CAL) fell 13.06 percent, United Airlines parent company UAL (NAS: UAUA) was 14.49 percent lower, and US Airways (NYSE: LCC) dropped 17.98 percent.

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