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London - Global stock markets were feeling no pain Wednesday from the collapse of what would have been the world's second-largest merger ever when Pfizer and Allergan abandoned their $160bn tie-up.
Most European markets were modestly higher in afternoon trading and Wall Street also opened on the upside, with shares in most rival pharmaceutical companies posting solid gains.
Pfizer said it was abandoning plans to merge with Ireland-based Allergan, citing new US rules cracking down on tie ups aimed at saving on taxes.
The deal would have resulted in the merged company's headquarters being Ireland, which has much lower corporate tax rates then the US, although most of its business would continue to be in the United States.
Pfizer's decision to call off the merger came after the US Treasury Department announced new rules to discourage mergers between US and foreign businesses designed to sharply lower the US company's tax bill.
The abandoning of the merger "has counter-intuitively sparked buying in other UK and Irish pharmaceutical groups," said CMC Markets analyst Jasper Lawler.
"Speculation that Pfizer will look for another partner in its quest to relocate its headquarters and lower its tax burden has sent the shares of Shire and AstraZeneca flying," he added.
Shire shares shot up 4.3% and AstraZeneca added 3.2%.
Swiss-based Novartis gained 1.2% and France's Sanofi rose 1.7%.
Shares in Allergan, which are listed in New York and plummeted 14.8% on Tuesday, dipped 0.2% at the open.
Pfizer shares climbed 1.4% after gaining 2.1% on Tuesday.
In other corporate activity Wednesday, shares in Air France-KLM slumped 3.5%, a day after the company said Alexandre de Juniac is to resign as chairman and CEO to take charge of aviation industry group IATA.
Glencore dropped 4.7% after the commodities giant announced it was selling nearly half of its vast agriculture business to a Canadian pension fund for $2.5bn (€2.2bn), in cash.
Most Asian markets edged up Wednesday but early gains from an oil rally tapered off, with worries about the global economy and the upcoming earnings season keeping traders on edge.
The return of nervousness to global markets put further pressure on the dollar, which was sitting at 17-month lows against the yen.
After a confident rebound in March, analysts suggest dealers from Asia to the Americas may be concerned that the advances - which followed January and February's bloodbath - were a little overdone.
Tokyo ended down 0.1% on Wednesday, retreating for a seventh straight day as a strong yen overshadowed a surge in utilities.
Wall Street will later turn its attention to the minutes of last month's US Federal Reserve monetary policy meeting.
Last week equities won a brief rally after the US Federal Reserve chief Janet Yellin expressed a cautious path to future interest rates.
Since the central bank's last policy meeting, official data have pointed to a solid jobs market and positive manufacturing activity in the world's biggest economy.
"After a better than expected jobs report on Friday, all eyes will be on the... meeting minutes for March, due for release on Wednesday evening," said James Hughes, chief market analyst at GKFX.
"What we must remember about the US economy is that recent numbers have not been bad, and still show that the economy could sustain further rate rises this year," he added in a note to clients.
