European shares fell on Thursday in early deals, weighed down by healthcare stocks after US President-elect Donald Trump targeted pharmaceuticals' drug pricing in a press conference.
Europe's healthcare sector index dropped 2.2 per cent, the biggest sectoral faller, and headed for its biggest loss since November. The pan-European STOXX 600 index was down 0.5 per cent.
Trump had on Wednesday commented on the need for competitive drug pricing, saying pharmaceutical companies were “getting away with murder” by charging high drug prices.
“The healthcare companies in Europe are quite interconnected with the US so Trump's comments bode badly for the sector," said Jasper Lawler, senior market analyst at London Capital Group.
Biotechnology was a top gainer in the last bull rally so traditional market rotation dictates it should not lead the Trump rally in any case, Lawler said. “A hostile policy [on healthcare] just adds extra pressure.”
Pharmaceuticals companies Novo Nordisk, Inmarsat and BTG were the top STOXX fallers, with Novo smarting from a US class action lawsuit, down 5.3 per cent.
Britain's Jupiter Fund Management also slumped, down 5.4 per cent after reporting that clients pulled 373 million pounds ($456 million) from its funds during the fourth quarter, largely exiting European and multi-manager strategies.
Italy's UBI Banca was top of the STOXX, gaining 11 per cent on news the bank would buy three rescued Italian banks through a 400 million euro share issue.
Swiss luxury goods group Richemont was also a top European gainer, its shares jumping 8 per cent and heading for their biggest one-day gain in nearly four years, after its trading update indicated a pick-up in demand for watches and jewellery. Peer Swatch Group also gained 5 per cent.
Britain's blue-chip FTSE 100 was down 0.2 per cent, with retailers Tesco and AB Foods top fallers despite results being in line with forecasts. Peer Sainsbury was also down 2 per cent.
“Tesco stock still has fulsome recovery earnings multiples, the equity does not yet yield a dividend and on a pension and lease adjusted basis the solvency ratios are still high in an absolute and relative context,” said Shore Capital analyst Clive Black.
“Accordingly, we see this as a good statement, albeit perhaps not good enough for the 'uber' bulls.”
Rival supermarket Marks & Spencer was up 2.5 per cent after a strong Christmas trading update.
Basic resources and precious metals miners once again led the index, boosted by a weaker dollar, with Randgold Resources, Fresnillo, and Anglo American top gainers.