* FTSEurofirst 300 down 0.7 percent
* Novo Nordisk sinks on U.S. drug approval delay
* JP Morgan sees opportunity in Spanish equity weakness
By Toni Vorobyova
LONDON, Feb 11 European equities eased on
Monday, pursuing the previous week's retreat from multi-month
peaks and dragged down by Novo Nordisk after a
regulatory set-back for a new drug.
The weakness in European equities was fairly broad with all
but three sectors in the red. Energy and mining stocks
were hit by falling commodity prices while political
turbulence in Italy and Spain is still weighing
on banks and on their national indexes.
The FTSEurofirst 300 provisionally closed down 0.7 percent,
at 1,154.31 points, continuing a correction from 2-year highs
set at the end of January which analysts said could have further
to run in coming sessions.
"At this juncture we are not buying further equities," said
James Butterfill, global head of equity strategy at Coutts.
"Fundamentally we do like equities but at this juncture, from a
technical short-term view ... we are being cautious."
Shares in Novo Nordisk plunged 13 percent, their worst fall
in four years after U.S. regulators requested more tests on its
key new insulin drug, potentially delaying the approval by
several years and threatening the Danish firm's long-term
The unexpected announcement prompted investors to ditch what
had been one of the most expensive European pharma stocks, with
some instead snapping up French rival Sanofi, whose
own insulin drug now faces less competition in the near term.
"Novo was trading on twice the multiple of the likes of
Sanofi, Roche and Novartis. It's a very well held stock that's
relative expensive," said Kevin Lilley, European equity fund
manager at Old Mutual Asset Management, who benefitted from
Monday's move thanks to his strong position in Sanofi.
Prior to the sell off, Novo Nordisk had traded on 22.6 times
its expected earnings per share over the next 12 month, compared
to Roche on 13.4 times and Sanofi on just 11.2 times, according
to Thomson Reuters StarMine data.
OPPORTUNITY IN SPAIN?
On a national basis, Spain's IBEX was the worst
performer outside of Scandinavia, down 1.2 percent as a
corruption scandal drove support for Spain's governing People's
Party to a 20-year low.
Concerns about the impact of a 32 percent devaluation of
Venezuela's bolivar currency on Spanish companies with a
presence in Latin America - including Telefonica,
Repsol, Mapfre and BBVA - also
contributed to Madrid's underperformance.
"Spain suffered disproportionately in the consolidation so
far. IBEX is down on the year and underperforming Dax
even though Spanish bond spread to German bund are tighter,"
strategists at JPMorgan said in a note.
"We think there is an opportunity to add to Italy and Spain
in this weakness as the recent political uncertainty is likely
to fade very soon, within weeks."