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Stocks rise as deals spur drugmaker rally

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(Bloomberg) — U.S. and European stocks rose, led by gains in drugmaker shares as more than $70 billion in global takeover offers bolstered speculation of more deals. Oil fell from a seven-week high and the U.S. dollar weakened.

The Standard & Poor’s 500 Index rose 0.1 percent to 1,873.65 at 9:32 a.m. in New York. Health-care stocks in the gauge climbed 0.6 percent. The Stoxx Europe 600 Index added 1.2 percent. West Texas Intermediate crude slid 1.3 percent on estimates that U.S. supplies rose last week.

The Australian dollar rose against its 16 major peers and the Bloomberg Dollar Spot Index snapped a seven-day streak of gains. The yield on Treasury two-year notes set for sale today was near the highest level since 2011.

Novartis AG agreed to buy GlaxoSmithKline Plc’s cancer-drug business for as much as $16 billion while selling most of the company’s vaccines division to Glaxo for $7.1 billion and its animal-health unit to Eli Lilly & Co. for $5.4 billion. Valeant Pharmaceuticals International Inc. offered to buy Allergan Inc. in a cash-and-stock deal valued at $45.7 billion. Thirty companies in the S&P 500 disclose results today, while a further 121 members report before the end of the week.

“With earnings, companies have been downgrading expectations heading into the season, so it looks like we’ll surprise more to the upside,” David Wartenweiler, chief investment officer at Habib Bank AG, said by telephone from Zurich. “On M&A, CEOs are doing what they should be doing. They’re looking at their portfolios and trying to benefit from opportunities. That should be a tailwind for markets.”

Emerging markets

The MSCI Emerging Markets Index slid 0.3 percent and Russian stocks fell as an accord designed to ease tension in Ukraine showed signs of collapsing.

U.S. Secretary of State John Kerry warned Russian Foreign Minister Sergei Lavrov yesterday “there will be consequences” if Russia fails to act “over the next pivotal days” to restrain pro-Russian militants in eastern Ukraine, spokeswoman Jen Psaki said in Washington. In Moscow, Lavrov called on the U.S. to hold Ukraine’s government accountable for curbing what Russia portrays as right-wing militias. Biden expressed U.S. support for Ukraine during a two-day visit to Ukraine. The U.S. said it’s offering a $50 million aid package, which includes $11.4 million “to support the integrity of the May 25 elections,” according to a fact sheet issued by the White House. While the U.S. won’t unveil new sanctions while Biden is on this trip, Obama’s government hasn’t seen progress on the accord, said an administration official who briefed reporters on condition of anonymity. A decision will be made in a matter of days.

Nickel advanced 1.8 percent, climbing for a third day on speculation turmoil in Ukraine will lead to supply disruptions from Russia, the second-largest producer of the refined metal. Indonesia, the biggest producer of the metal from mines, banned ore exports in January.

WTI for May delivery, which expires today, slid as much as $1.13 to $103.24 a barrel. Crude stockpiles in the U.S., the world’s biggest oil consumer, probably increased for the 13th time in 14 weeks, a Bloomberg News survey shows before Energy Information Administration data tomorrow.

–With assistance from Jonathan Burgos in Singapore, Emma O’Brien in Wellington, Mariko Ishikawa in Tokyo, Mika Otsuka in New York, Michael Shanahan, Cecile Vannucci, Claudia Carpenter and Paul Dobson in London and Corinne Gretler in Zurich.


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