Ebb & Flow

The upswing in U.S. biotech stocks is leading to hopes in Europe that the long down trend has been stopped, at least through year end if not for the long term. Last week, the BioCentury 100 index had its five-week winning streak snapped - barely - when it slipped only 0.4% during a bad week for equities in general.The slip was minor, given the assertion by AstraZeneca (AZN) that the failure of its Iressa EGFR inhibitor in combination with chemotherapy was likely a class effect. Indeed, the index is up a respectable 8% since July 5 (see "Market Moves," below & "A Long Tail," A13).

In London and Europe, where the biotech sector is weaker, investors see the U.S. move being triggered by both specialist and general funds returning to the large cap names. "Almost eight weeks ago the general funds began coming back into the large U.S. biotech names," said Niall Kirk, assistant director of life science global funds with Foreign & Colonial. "Over the last six weeks we have begun to reinvest in the biotech sector, as we saw a floor in early July."...