Despite a series of rumors relating to mergers & acquisitions in several sectors this week, the European equities markets were lower on Friday and for the week as investors became concerned again about the state of the US economy, which seems to be slowing. The FTSE Eurofirst 300 was 1.1 percent lower on Friday to 1,370.86, bringing it to an 0.2 percent decline for the week even though it hit four-month highs earlier in the week.

One sector that saw activity on the M&A front was pharmaceuticals. German company Merck announced that it will purchase Serono to create the seventh largest pharma group in Europe. The deal will cost Merck €10.6 billion. Merck gained 1.2 percent over the week to €76.90, while Serono added 21.8 percent to SFr1,076. Elsewhere in the sector, Altana added 0.2 percent to €45.31 on the news that it will sell its pharmaceutical unit to Nycomed.

Continental added 2.7 percent to €88.36 after it said that had been approached about a deal. The gain came even though discussions had ended after analysts expressed the opinion that the German tire maker is a good target for a leveraged buyout.

Swedish truck maker Scania B shares gained 6.5 percent to €452 after it rejected an offer from MAN. MAN dropped 1.9 percent to €62.77 on the news, but the two biggest shareholders in Scania saw gains out of the issue. Volkswagen added 0.4 percent to €65.23 and Investor was 1.6 percent higher to SKr155.50.

The FTSE Eurofirst 300 was 0.4 percent higher on Thursday, to 1,386.58 as mergers and acquisitions activity, both agreed to and rumored, again was in the spotlight.

The news that Merck will buy a 64.5 percent stake in Serono mobilized the pharmaceuticals sector. Merck, which will spend SFr16.6 billion in the deal, dropped 4.7 percent on the session to €74.65. Serono, however, added 17.6 percent to SFr1,076 on the announcement of the deal. Elsewhere in the sector, Altana gained 1.2 percent to €45.17 after it said it will sell its pharmaceuticals business to Danish company Nycomed. In addition, Sanofi-Aventis was 1.4 percent higher to €69.65.

Bids rumors led to gains in the Swiss specialty chemical sector. On the strength of a rumor that Dow Chemical is thinking of bidding, Ciba gained 2.9 percent to SFr73.60, while Clariant added 3.7 percent to SFr16.90 amid speculation of interest from private equity.

EADS was 2.4 percent lower to €22.26 after it announced yet another delay in delivery of the A380 superjumbo jet. Not all the news for EADS was bad, however, as Lufthansa said it has put in an order for 30 Airbus A320s, a smaller aircraft, and has the option to order an additional 30 planes.

The Norwegian oil sector was lower on recent declines in crude oil prices. Statoil dropped 3.2 percent to NKr155, while Norsk Hydro fell 4 percent to NKr145.

The FTSE Eurofirst 300 ended the week with a gain of 1.7 percent, to 1,276.32, but over the week it dropped 2.8 percent. Miners, oil companies, and other sectors connected to resources were responsible for much of the declines on the week.

The pharmaceuticals sector was mixed. Irish drugmaker Elan lost almost 17 percent during the week to €12.38 after the US Food and Drug Administration allowed them to return their multiple sclerosis drug Tysabri to the shelves, but only as a treatment of last resort after its sales were stopped earlier due to the deaths of some patients taking the drug. With the reintroduction, Elan said that it would increase the price of the drug. Drug companies with rival MS treatments saw gains, however. Schering added 1 percent to €86.25, while Serono was up 3.8 percent to SFr802. Also gaining during the week was Roche, which was up 1.5 percent to SFr194.20 after it announced encouraging test results on three different cancer drugs.

Telecommunications companies were mixed as well. Telecom Italia gained 0.9 percent to €2.24, Belgacom added 1 percent to €25.90, and Telefonica advanced by 1.4 percent to €13. But France Telecom declined by 2.3 percent to €17.29 after it said it would sell its 54 percent share of directory publisher PagesJaunes, which was up 2.5 percent this week to €22.89.

In oil related sectors, Austrian oil prodcuer OMV dropped 15.6 percent during the week to €39.75. Atlas Copco, the Swedish engineering company that works with oil producers, added 4.4 percent to SKr165.50 on Friday, but still declined by 10 percent over the week.

In Europe on Tuesday, equities markets were down on a day when every single sector saw declines in a general sell-off as investors acted on concerns over what they feared might happen to interest rates worldwide. The FTSE Eurofirst 300 declined by 1.9 percent on the day to 1,280.55. In Germany and in France the Xetra Dax and the CAC had each lost over 2 percent by the close.

Ferrovial of Spain was down 4.7 percent to €57.95 on the news that British airports operator had accepted their offer rather than a higher bid from a group led by investment bank Goldman Sachs. The decline came as some analysts expressed the belief that Ferrovial has taken on more than it can handle with the offer. Meanwhile, BAA’s London-listed shares closed below Ferrovial’s bid of 950.25 per share.

Still in aviation-related shares, discount airline Ryanair dropped 1.2 percent to €6.80 despite a full-year earnings report that was a bit better than had been expected. Dresdner Kleinwort Wasserstein reiterated its “buy” recommendation on the air carrier.

European automobile manufacturers saw substantial declines. DaimlerChrysler was down 4.2 percent to €38.33 after Credit Suisse lowered its target share price for the carmaker from €46 to €44. Elsewhere in the sector, Porsche lost 3.4 percent to €748.87, while Fiat dropped 3.3 percent to €10.08 and BMW was 3 percent lower at €37.88.

In the pharmaceutical sector, Irish drug maker Elan lost 16.3 percent to €12.35 after its drug Tysabri, a treatment for multiple sclerosis drug was approved by the US Food and Drug Administration only for use in patients who have not responded to other treatments. Tysabri was taken off the market last year after some patients being treated with the drug experienced fatal side effects. Serono, the Swiss drug maker, added 1.3 percent on the day to SFr796 on a Bear Stearns comment that it did not see the FDA ruling in Elan’s favor as a threat to Serono’s MS drug, Rebif.

The FTSE Eurofirst 300 was down 0.9 percent this week to 1,370.43. However, it added 2.6 percent during the month and gained 8 percent during the first quarter of 2006. The week’s losses were put to profit-taking amid worries about rising interest rates in both the eurozone and the United States.

Among gainers on the week were the oil sector. Statoil gained 5.3 percent to NKr189 and Neste Oil added 4.4 percent to €28.37. Elsewhere, ENI received permission from the European Commission to build a higher stake in Galp Energia, the Portuguese oil company. The news sent Energias de Portugal up 6.9 percent to €3.24 on speculation that the Portuguese energy sector could see further mergers and acquisitions.

Swiss biotechnology company Serono dropped 1.9 percent to SFr908.50 on speculation that it might be looking to buy elsewhere. Earlier in the week it had been thought that it might receive bids itself. Meanwhile Bayer, the German pharmaceuticals group, lost 6.7 percent to €33.06 after it raised €2.3 billion in a convertible bond issue so that it can buy Schering. Merck had earlier dropped out of the bidding.

Danish shipping group Moller Maersk was down 9.9 percent on the week to DKr52,900 on disappointing profits for 2005. It warned that low freight rates and rising oil prices will send profits 10 - 15 percent lower in 2006 than they were last year.

In Europe on Tuesday, the FTSE Eurofirst 300 was down 0.5 percent to 1,364.9 on worries that both US and eurozone interest rates could be going up again soon. The likelihood that eurozone rates could go up again was increased by new data on German business confidence that was up more than had been expected.

The telecommunications sector was instrumental in the declines after the European Commission said it will cut international roaming charges on calls made from mobile phones. The plan could cut charges to consumers by as much as 60 percent. UK mobile company Vodafone was down 4 percent to 119½p. Spanish company Telifonica Moviles lost 0.8 percent to €10.74. TeliaSonera, listed in Stockholm, dropped 1.3 percent to SKr46.40.

There were also losses among fixed-line telecommunications companies. Hellenic Telecom dropped 3 percent to €17.80, Telekom Austria was down 2.5 percent to €19.42, and France Telecom declined by 1.5 percent to €18.71.

Among insurers, Alleanza of Italy was down 4.9 percent to €9.95 even though it said net profits would be up by 30 percent by 2008. Swiss Life dropped 4 percent to SFr266 as investors worried that most of its 44 percent profits in 2005 had been due to one-time income.

In the biotechnology sector, Swiss company Serono added 2 percent to SFr933 on rumors that a bid for the company would be forthcoming soon.

Equities markets in Europe saw advances on Monday on the strength of gains the oil sector as the FTSE Eurofirst gained 0.2 percent to 1,345.92, a new four and a half year high.

The oil sector was up on higher crude oil prices. Statoil gained 3.5 percent to €178. Meanwhile Saipem, the largest oil field services company in Europe, was up 3.1 percent to €16.04.

The banking sector was also up, with more takeover talk in Italian banking. Mediobanca, rumored to be a target despite an agreement that gives core shareholders 54 percent of the bank, was up 4.2 percent to a record high share prices of €17.60. Capitalia, also seen as a potential takeover target, gained 2.8 percent to €6.325. Meanwhile, EFG Eurobank was up 4 percent to €33.06 as JP Morgan raised its price target from €40 to €44 on the strength of the bank’s expansion in southeastern and central Europe.

Utilities were up on the day as well, with Electricite de France gaining 2.2 percent to €41.56 on consolidation talk. Eon gained 0.6 percent to €93.44 after its chief executive said he expects that three dominant players will emerge in the sector.

The pharmaceuticals sector was mixed. Schering was up 3.3 percent to €58.39 on an announcement that its fourth-quarter operating profits were up 30 percent, slightly higher than forecasts. It also said that it will buy the property and equipment used by its US partner, Chiron, to produce the drug Betaferon (Betaseron in the US), which is expected to be approved for the treatment of early-stage multiple sclerosis before the end of the third quarter. Shares in Novartis, which has not yet finalized its planned purchase of Chiron, was up 0.1 percent to SFr71.50.

Elsewhere in the sector, Serono dropped 2.2 percent to SFr959 as concern grew about competition between its multiple sclerosis drug Rebif with Betaferon. Sanofi-Aventis dropped 3 percent to €71.70 after regulators in the United States delayed final approval of Acomplia as a weight management treatment and rejected the drug as a stop-smoking aid.

In Europe on Monday, the FTSE Eurofirst 300 finished the day up 0.1 percent at 1,321.65, largely on activity within the banking sector.

BNP Paribas initiated a takeover bid for Banca Nazionale del Lavoro, Italy’s sixth largest bank. The bid, worth €9 billion, spurred large gains in the Italian banking sector. Capitalia was up 7.6 percent to €5.74. Banca Popolare di Milano gained 6.9 percent to €10.57. Mediobanca advanced 4 percent to €16.24. Banca Intesa was up 3.3 percent to €4.90. BNL, however, fell 2.4 percent to €2.89.

In other fallout from the announcement from BNP, BBVA lost 1.2 percent to €16.22. BBVA will sell its 14.9 percent stake in BNL as part of the deal. Elsewhere in the banking sector, Societe Generale gained 0.5 percent on the day to €109.90, but Credit Agricole fell 0.1 percent to €29.05.

Takeover rumors also affected the oil sector as Repsol gained 4.2 percent to €23.18 on reports out of Spain that BP and Italian oil company Eni are thinking about entering takeover bids for Repsol, which is seen as vulnerable after the expiration of Spanish government protection of the company from hostile takeover. Eni gained 0.8 percent on the day to €24.60. Elsewhere in the oil sector, Austrian company OMV gained 6.4 percent, while Norwegian firms Statoil and Norsk Hydro were both up. Statoil gained 3.4 percent to NKr184.00 while Norsk Hydro advanced 1.9 percent to NKr815.00.

In the biotech sector, Swiss company Serono posted disappointing profits and revenues growth in the fourth quarter, opening it to takeover speculation and sending the company’s shares down 0.1 percent on the day to SFr958.50. GlaxoSmithKline has been seen as a likely party to attempt a takeover, but it has been reported to be unwilling to pay what analysts say would be an adequate per-share price. Other possible bidders for Serono are thought to be Novartis and Johnson & Johnson.