* FTSE 100 gains 0.9 pct

* AstraZeneca (NYSE: AZN – news) surges on report of Pfizer (NYSE: PFE – news) approach

* GlaxoSmithKline (Other OTC: GLAXF – news) jumps on asset swap with Novartis

(Updates with closing prices, adds technical detail)

By Alistair Smout

LONDON, April 22 (Reuters) – Corporate activity in the

pharmaceutical sector on Tuesday pushed Britain’s benchmark

stock index to a two-week high and to within sight of a peak for

this year.

Drugmaker AstraZeneca rose 4.7 percent, with trading

volumes in the stock more than three times its 90-day average,

after the Sunday Times reported a 60-billion-pound ($ 101

billion) approach from U.S. peer Pfizer.

Both companies declined to comment. Analysts at Citigroup (TLO: CIT-U.TI – news)

said in a research note they expected Pfizer (TLO: PF-U.TI – news) “to push

aggressively ahead with a second approach”, referring to the

reported rejection of the offer. Pfizer stock rose 1 percent.

GlaxoSmithKline rose 5.2 percent after an asset-swap

with Swiss peer Novartis (Xetra: NOT.DE – news) , which announced a

multi-billion dollar revamp. Shire (LSE: SHP.L – news) rose 7.6 percent on

hopes that sectoral takeover activity would spread.

“M&A activity shows a certain confidence on the part of the

executives of the companies. The AstraZeneca would be one of the

biggest deals ever done for a London-listed company,” Jasper

Lawler, market analyst at CMC Markets, said.

“It’s true to say that when deals like this come off, more

follow suit. People have put a quick bet in there (on Shire)

hoping that they could be the recipient of some other kind of

deal,” he said.

The blue-chip FTSE 100 index closed up 0.9 percent,

or 56.51 points, at 6,681.76 points. The UK stock market had

been closed since Thursday for the long Easter weekend holiday.

The FTSE 100 hit a peak of 6,867 points in late January, its

highest level since early 2000 and is now less than 3 percent

below that level, having recovered from a slide driven by

concern over a slump in emerging markets economies and tension

between Russia and Western powers over Ukraine.

However, it has been stuck in a 200-point range for the last

six weeks. Tuesday’s move took the index to the top end of that

range, but analysts were cautious.

“We’re still in quite a wide range, and there hasn’t been

too much outside of the pharma sector to make us think that

we’ll break out of it soon,” Jeremy Batstone-Carr, analyst at

Charles Stanley (LSE: CAY.L – news) , said.

“(However), there’s nothing like a bit of M&A to excite

investors and coalesce interest in relation to the market

generally. It shouldn’t be taken as a sign of the top of the


The index finished below its intraday high – its highest

since April 4, and technical analysts said it was too early to

tell whether the challenge to the resistance area could be

sustained and if the index would break out of the range.

“The FTSE 100 cash index is posting a rebound but is

challenging the upper end of the short term trading range at

6,706,” Trading Central technical analyst Nicolas Suiffet said.

“It’s too early to turn bullish again. Only a clear break of

the resistance area 6,706/6,723 would reinstate a positive

bias,” he said.

($ 1 = 0.5951 British pounds)

(Additional reporting by Sudip Kar-Gupta; Editing by Louise

Ireland (Other OTC: IRLD – news) )