UPDATE 1-Roche rallies after U.S. Avastin approval

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ZURICH, Feb 25 (Reuters) - Roche Holding AG (ROG.VX: Quote, Profile, Research, Stock Buzz) stock gained nearly 4 percent on Monday after U.S. regulators approved its Avastin drug for treating advanced breast cancer and added a potentially significant new revenue source.

Shares in Genentech Inc (DNA.N: Quote, Profile, Research, Stock Buzz), Roche's majority-owned U.S. partner, jumped nearly 9 percent on Friday as most obsevers had expected the Food and Drug Administration (FDA) either to delay a decision or reject the medicine in this use.

"We expect many on the Street will need to increase 2008 and 2009 numbers, as approval will bring better reimbursement and ability to market in breast cancer," said Andrew Baum, analyst at Morgan Stanley.

Roche participation certificates, its most widely traded form of equity, were 3.9 percent higher at 203.80 Swiss francs by 0809 GMT versus a 1.6 percent rise in the European pharmaceuticals sector.

The approval was unexpected because an FDA advistory panel had in December narrowly voted to recommend rejecting Avastin for breast cancer.

Avastin, which works by stopping the blood supply that tumours need to grow, is expected to be one of the world's biggest-selling drugs.

It is already approved in colorectal and lung cancers, and had previously been given a green light in Europe for metastatic breast cancer. (Reporting by Sam Cage; Editing by Quentin Bryar)