On Wall Street, stocks opened higher as investors hunted for bargains, shrugging aside disappointing jobless figures, which showed U.S. companies shed 79,000 jobs in June, far more than expected by economists and as May factory orders came in as expected.

In the first few minutes of trade, the DJIA index was up 19.54 points at 11,401.80 shortly after the market opened for trading. Separately, the Nasdaq composite rose 6.98 points to 2,311.95 while the S&P 500 index gained 5.13 points to 1,290.04.

Blue chip AstraZeneca gained 98 at 2,228 after saying it would not need a full trial to defend its Seroquel patent from generic company Teva Pharmaceutical Industries. This was after being granted its request for a summary judgement.

Sector peer GlaxoSmithKline added 43 at 1,146-1/2.

Mining sector strength helped to buoy the FTSE 100 as metals prices, notably gold, stayed near recent highs.

Anglo American was 34 pence higher at 3,435, Vedanta Resources was up 20 at 2,104, Kazakhmys climbed 27 at 1,484 and BHP Billiton rose 9 to 1,850.

Oil prices, though below records, were still relatively high, fuelling gains in the oil sector. Royal Dutch Shell ticked up 8 at 1,989-1/2, Cairn Energy rose 67 to 3,225, while Tullow Oil was up 25-1/2 at 931-1/2.

On the downside, Marks & Spencer plunged over 18 percent, or 59-1/4 pence, to 258-3/4 after a disappointing and unscheduled trading statement unsettled investors.

The retailer said UK like-for-like sales were down 5.3 percent in the 13 weeks to June 28 as consumer confidence levels deteriorated markedly.

Retail and supermarket stocks followed, with Next down 58 at 851-1/2, Kingfisher 4.2 lower at 102.5, Sainsbury down 20 at 290-1/4 and Tesco shedding 14 at 349.

On the second tier, housebuilders slumped after a gloomy statement from Taylor Wimpey.

The company, which said on Monday it was in talks to raise additional equity, said it has been unable to conclude a satisfactory transaction in light of current market conditions.

Also, it expects the UK housing market will remain weak at least through 2008 and does not anticipate any recovery in the short-term. Its UK order book was 33 percent lower in value at June 29 than at the comparable point in 2007.

Taylor Wimpey's shares plummeted almost 56 percent, down 34 pence at 26, giving it a value of just over 300 million pounds.

Fellow housebuilders Barratt Developments fell 21-3/4 at 35-1/2, Persimmon lost 47 to 244-1/2 and Bellway dropped 53-3/4 to 363-1/2.

Economic news did not help the sector. The UK construction sector PMI came in at 38.8 versus 43.9 in May and below the forecast of 42.5, while the Bank of England said the amount of money homeowners took out of their homes in the first quarter slumped to its lowest level for seven years.

Away from housebuilders, Johnston Press slipped 5-1/4 to 41-1/2 after Citigroup cut its recommendation to 'sell' from 'hold', reduced its target price to 43 pence from 88 and lowered its EPS forecasts, in the wake of Trinity Mirror's profit warning Monday.

Among mid-cap risers, a number of M&A stories helped fuel gains. Informa was 48-3/4 higher at 427 after it confirmed it has been approached by a private equity consortium led by Providence Equity with a 506 pence per share offer.

Market research and information group Taylor Nelson Sofres, looking to merge with GfK, but still a potential target for WPP Group, was up 5-1/4 at 224-3/4.

Babcock International added 18 to 617-1/2 after the UK Office of Fair Trade approved the company's acquisition of Weir Group's Strachan & Henshaw. joanne.frearson@thomsonreuters.com jf/wj

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This could impact AstraZeneca as it is developing the diabetes treatment Onglyza, and had predicted that it would submit a marketing application by the middle of this year.

Responding to questions about the delay, AstraZeneca said there is likely to be an announcement made when partner Bristol-Myers Squibb Co. announces its first-quarter results on July 24.

Analyst Mike Ward, from Nomura Code Securities, said: "I'm not saying that saxagliptin will fall foul of that (the committee's recommendation). We need to wait until the end of today to see what the committee recommends to the agency. But the FDA has shown itself minded towards perhaps raising the barriers to getting drugs onto the diabetes market."

AstraZeneca said it was premature for it to comment until the committee had made its recommendations to the FDA.

The recommendation could also effect Eli Lilly and Company and Amylin Pharmaceuticals Inc, which are in late-stage tests for a long-acting version of their Byetta drug.

The committee meeting has been overshadowed by an announcement last night that AstraZeneca has won a legal battle with Teva Pharmaceutical Industries over the patent for its bipolar treatment Seroquel, potentially giving it exclusivity over the drug, its second-biggest, until 2011. ben.deighton@thomsonreuters.com bsd/jrr

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The victory, which should give AstraZeneca exclusive rights until 2011 as long as an appeal by Teva stumbles, had been priced into some analysts' forecasts, while some had assumed Teva would go ahead and launch.

The outcome was hard to call because while the type of challenge to the patent, a no inequitable conduct charge, is notoriously difficult to prove, Teva has a reputation for running the gauntlet with so-called At Risk launches, where it launches even though it does not have a full legal green light.

Mike Ward from Nomura Code Securities, who has the stock on a 'Reduce' rating, said: "We didn't have any change in our numbers because we thought ultimately AstraZeneca would win the litigation ... the sigh of relief that's come through has put like five or six percent on the share price, because earlier this year people were fretting over Nexium, they were fretting over Seroquel from a patent perspective, the shares underperformed earlier this year."

Peter Cartwright at Evolution Securities, who has the stock on an 'Add' recommendation, also that while the positive outcome had been written into his predictions, he believed that investors had overplayed the risk.

"One way or another our numbers assumed that they didn't get hit prematurely (however) it's clearly significant because it does remove a threat, but I think the financial markets perhaps had blown the threat up to a greater degree than was justified earlier this year."

Deutsche Bank, which has a 'Buy' stance, in a note to clients also said: "We had assumed a successful defence but feel the market had attached significant risk to these earnings and therefore a successful resolution is important for sentiment. AstraZeneca should now be considered a defensive name."

However Citi said it was reviewing its forecasts as a result of the hearing and said the discount to the sector should partially close, but reiterated its Buy/Medium Risk recommendation.

"We had assumed a launch at risk of 25mg Seroquel (12 percent sales) later in 2008 leading to only 3 percent US growth," the broker said in a note.

"The shares trade at a 30 percent discount to the sector. We assessed a 20 percent downside to 2009 estimated EPS if there was full generic competition to Seroquel," it said.

Ben Yeoh at Dresdner Kleinwort said: "We've always said that it would maybe add something like 100 pence onto our DCF," he said.

Goldman Sachs in a note increased its 12-month target by 80 pence. "Removing the risk-adjustment from our 12-month price target (returns and DCF-based) increases it from 2320p to 2400p." It reiterated its 'Neutral' stance.

However Merrill Lynch in a note to clients reiterated its 'Underperform' rating and said that its forecasts had assumed that AstraZeneca would win the litigation anyway.

"We continue to believe AZN faces significant long term growth challenges, and maintain our Underperform rating," the broker said.

At 11.03 am AstraZeneca shares were up 5.6 percent, or 119 penmce, to 2250 pence/share, off intraday highs of 2287 pence/share. ben.deighton@thomsonreuters.com bsd/jfr

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The biotech group said the acquisition is expected to be earnings positive in the current year and is predicted to boost EBITDA by about 100 million crowns, almost double the 52 million crowns BioPhausia reported in 2007.

BioPhausia said it will partly finance the deal through a rights issue of about 300 million crowns. hans.chumakonde@thomsonreuters.com hc/wj

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