Market report: Friday close

THE big drugs companies greeted a US court ruling with a huge sigh of relief today. The case was brought by pharmaceuticals giant Eli Lilly against three cheap generic drug manufacturers - Ivax, Dr Reddy's and Teva.

They had wanted to market generic versions of Zyprexa, a treatment for schizophrenia, but the US drugs giant argued that such a move would infringe the patents covering the drug which accounts for 20% of its revenues.

The judge at the Indiana court agreed and ruled in favour of Eli Lilly. One of the generic companies, Ivax, said it would appeal. But broker Merrill Lynch said the ruling provided a major boost to the sentiment of the entire pharmaceutical industry.

The big drugs companies have been plagued by a spate of generic court challenges and infringements during recent years that have made a serious dent in their profits.

AstraZeneca responded with a rise of 43p to 2284p and GlaxoSmithKline put on 12p to 1265p. Broker Credit Suisse First Boston quickly raised its rating on the European drugs sector from market weight to overweight. It rates AstraZeneca as a trading buy and has lifted its target price from 2250p to 2400p. It also has an outperform rating on Shire Pharmaceuticals, down 15p at 611p, and a 700p target price. Rival broker Teather & Greenwood has buy ratings on AstraZeneca and Shire.

Share prices struggled to hold above 4900 with the FTSE 100 index down 53.8 at 4891.6 in the face of a third day of losses on Wall Street this afternoon.

Barclays lost 12½p to 557½p as takeover hopes faded. It has been seen as a likely target for Citigroup, which has sanctioned a $15bn (£8bn) share buyback of its own.

Life assurer Friends Provident dipped 2¾p to 170½p as house broker Merrill Lynch placed 36.38m shares worth £62m - almost 2% of the £3.6bn company - with shareholders of Lombard International Assurance. The shares form part of a deferred performance-related payment for the acquisition of Lombard by Friends.

The company paid €265m (£180m) for Lombard, with the deal financed by an initial placing of 113m shares. The latest placing takes into account the group's financial performance last year and further similar moves may have to be made for this year and 2006.

Mobile phones operator O2 dipped 3p to 118¾p after broker Credit Suisse First Boston rated the shares an outright sell, although it raised its 12-month target price for the shares from 105p to 115p.

Bid target Allied Domecq was unchanged at 640p as it awaited terms of a joint £8bn offer from French rival Pernod Ricard and Fortune Brands of the US.

US Press reports claim that Constellation Brands, the world's biggest distributor of wine in terms of value, is anxious to get its hands on some of Allied's spirit brands, which include Canadian Club whisky and Beefeater Gin. But Constellation remains too small to bid for Allied on its own and is said to be looking for a partner.

LA Fitness rose 8p to 209½p. Bid talks with private equity outfit MidOcean Partners are at an advanced stage and would result in a 'fair and reasonable' offer being made.

It was the first day of trading on the Alternative Investment Market (Aim) for manganese miner Churchill Mining following a placing of 50m shares at 2p by broker Ruegg. The shares traded at 2.13p.