U.K. Stocks Drop After Weekly Gain as AstraZeneca Slumps

U.K. stocks retreated, following a weekly gain for the FTSE 100 Index, as AstraZeneca Plc slumped the most since August 2002 after rejecting a new takeover bid from Pfizer Inc.

AstraZeneca dropped 11 percent, wiping 26.5 points off the FTSE 100, after saying Pfizer’s sweetened offer of 69.4 billion pounds ($116.7 billion) was too low. Ryanair Holdings Plc rose the most since October 2008 after committing to pay shareholders a special dividend in the fourth quarter. A gauge of U.K. travel-and-leisure stocks rebounded from its worst week in a month as EasyJet Plc climbed 4.7 percent.

The FTSE 100 retreated 11.26 points, or 0.2 percent, to 6,844.55 at the close of trading in London. The U.K. equity benchmark gauge rose to a 14-year high on May 14 and climbed 0.6 percent last week. The FTSE All-Share Index also slid 0.2 percent today, while Ireland’s ISEQ Index rallied 2.6 percent.

“The likely thinking at AstraZeneca is that the valuation is low in the event that new drugs could be invented and growth came back,” said Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark. “But the business is not small and it would require a major blockbuster to really move the needle. There is rarely a fourth attempt to dance in a takeover bid so based on the developments over the weekend, the probability for a deal is now very low.”

Average asking prices for homes across England and Wales rose 3.6 percent in May from the prior month, reaching a record of 272,003 pounds, according to a report from property website operator Rightmove Plc.

Carney Warning

Bank of England Governor Mark Carney said surging home prices were the primary risk to the British economy, and that policy makers could do more to tackle excesses in the property market if needed. Options include imposing more checks on the affordability of mortgages, limiting types of loans or advising the government to rein in its Help to Buy program, Carney told Sky News yesterday.

AstraZeneca dropped 11 percent to 4,287.5 pence after closing last week at its highest price since Imperial Chemical Industries Plc spun off Zeneca Group Plc in 1993. The U.K. company said executives told Pfizer at the weekend that an offer would have to be more than 58.85 pounds for AstraZeneca’s board to recommend it to shareholders. Pfizer said its 55-pound-a-share proposal was final.

Ryanair gained 11 percent to 7.02 euros, rebounding from its worst week in nine months. The discount carrier said it will pay an additional 500 million euros ($686 million) to shareholders in the final quarter of 2014, reiterating its Feb. 3 pledge. The airline also said that summer bookings are “significantly ahead” of 2013, which will help boost its load factor -- a measure of seat occupancy -- by 2 percent in 2014.

Travel Stocks

The FTSE 350 Travel & Leisure Index rose 0.8 percent, following a 4 percent drop last week. EasyJet climbed 4.7 percent to 1,587 pence, while International Consolidated Airlines Group SA added 3.5 percent to 370.8 pence.

Bank of Ireland added 1.6 percent to 26 euro cents. UBS AG raised its rating on the lender to buy from neutral, saying its valuation is attractive and the bank will benefit from an improving Irish economy as retail and commercial lending activity pick up.

Mitie Group Plc advanced 2.4 percent to 318.3 pence after saying full-year pretax profit jumped to 68.4 million pounds from 56.3 million pounds a year earlier. The facilities-management provider raised its dividend to 11 pence a share for the period ending March 31, up from 10.3 pence.

Before it's here, it's on the Bloomberg Terminal.