FTSE stays in negative terrority

The FTSE 100 Index failed to move into positive territory today despite a major boost for drugmakers.

The prospect of consolidation in the European pharmaceuticals industry initially lifted London shares, but the Footsie later fell back after a broker downgrade hit a strong of utility companies.

By mid-morning the Footsie was 7.5 points lower at 5049.7 with National Grid Transco the heaviest faller.

Broker Dresdner Kleinwort Wasserstein downgraded the stock, leaving it 19.5p lower at 518p. A batch of rivals followed it in the fallers list, with United Utilities off 22.5p to 627.5p, Severn Trent off 28.5p to 913.5p and Scottish Power falling 13p to 417p.

This offset the positive news that Swiss drugs giant Novartis is to become the world’s biggest generic drug maker following deals worth €5.65bn (£3.9bn).

Glaxo strengthened 3% or 41p to 1282p after the announcement, AstraZeneca advanced 61p to 2136p and Shire cheered 12.5p to 574.5p as investors also welcomed news that major US drug Vioxx was safe enough to return to the US market.

Sentiment around pharmaceuticals firms has been dented in recent months by safety concerns about blockbuster treatments, but this news encouraged investors to look again at the sector.

Elsewhere, hotels group Millennium & Copthorne was ahead by nearly 4% or 14p to 402.25p after it said a strong performance by its London sites helped annual profits to more than double.

Printing group St Ives saw its stock slip 9% – off 37p to 391.75p – after it announced plans to close a factory with the loss of 210 jobs and warned annual profits before goodwill and exceptionals were unlikely to be higher than last year.

Utility firms in the lower tiers were also in the red, including water company AWG down 33.5p to 786.5p.