European stock markets rallied in morning deals on Tuesday as shares in pharmaceutical groups surged owing to a major reshaping of the sector. London's benchmark FTSE 100 index climbed 0.79 percent to 6,677.55 points compared with Thursday's closing level -- the last trading day before European markets closed for Easter. Frankfurt's DAX 30 jumped 0.95 percent to 9,499.05 points and the CAC 40 in Paris advanced 0.52 percent to 4,454.96. The euro rose against the dollar. "The pharma sector stood out (Tuesday)... on the back of news that two of the biggest players in the sector are making major changes to their business models," said Farhan Ahmad, a trader at TradeNext. Swiss pharmaceutical giant Novartis and British group GlaxoSmithKline (GSK) announced a major shake-up of their healthcare divisions on Tuesday in deals worth billions of dollars. It comes as reports over the weekend suggested that US pharmaceutical giant Pfizer was considering a $100 billion takeover of British rival AstraZeneca. "Pharmaceutical stocks have had a shot in the arm ... on rumours of an impending takeover for AstraZeneca," said Mike McCudden, head of derivatives at stockbroker Interactive Investor. In London deals, AstraZeneca's share price shot up 7.63 percent to 4,070 pence and GSK rallied 5.42 percent 1,643.55 pence. German drugs group Bayer gained 2.60 percent to 96.02 euros and French group Sanofi advanced 1.82 percent to 76.85 euros. Novartis said on Tuesday that it would buy GSK's oncology, or cancer treatment, business for $16 billion (11.5 billion euros) in cash and sell its vaccines division, excluding vaccines for flu, to the British company for up to $7.1 billion, also in cash. The two companies also announced a joint venture to create "a world-leading consumer healthcare business," focused on wellness, oral health, nutrition and skin health and expected to pull in around $10 billion in annual sales. Asian stock markets closed mixed, even though Wall Street had provided another strong lead. Wall Street jumped for a fifth straight session on Monday thanks to solid earnings reports. Attention is now on results expected this week from top firms including McDonald's, United Technologies and AT&T. In foreign exchange deals on Tuesday, the euro rose to $1.3805 from $1.3793 late in New York on Monday. The European single currency fell to 82.05 British pence from 82.13 pence, while the pound advanced to $1.6823 from $1.6791 on Monday. On the London Bullion Market, the price of gold decreased to $1,291.52 an ounce from $1,299 on Thursday.