Bloomberg News

Swiss Stocks Are Little Changed; Novartis Climbs, Givaudan Drops

July 05, 2011

July 5 (Bloomberg) -- Swiss stocks were little changed after five days of gains as investors awaited a U.S. report that may show factory orders rebounded in May.

Novartis AG, Europe’s second-biggest drugmaker by sales, advanced 0.7 percent. Swisscom AG, Switzerland’s largest telecommunications company, climbed 0.6 percent. Givaudan SA, the world’s biggest maker of flavors and fragrances, dropped 3.1 percent. Swissmetal Holding AG tumbled to the lowest in more than 20 years after being forced shut a plant that had been used as bank collateral.

The Swiss Market Index, a measure of the largest and most actively traded companies, slipped less than 0.1 percent to 6,244.44 at 12:32 p.m. in Zurich. The broader Swiss Performance Index also fell less than 0.1 percent.

“Equity markets will continue to trend sideways through the summer months before heading higher in the fourth quarter,” Christoph Riniker, head of strategy research at Bank Julius Baer Group Ltd., wrote in a report. “Investors appear to be uneasy given that economic leading indicators are faltering, albeit at high levels. On the other hand, other asset classes than equities are not compelling.”

The SMI rallied 4 percent last week, its biggest gain in three months, after Greek lawmakers passed a five-year austerity package, qualifying the country for further aid. The gauge has still tumbled 7.1 percent since its high this year on Feb. 18 as U.S. manufacturing and jobs reports fueled concern that the recovery is faltering and investors speculated that Greece will default on its debt.

U.S. Factory Orders

A U.S. report today may show that factory orders increased 1 percent in May following a 1.2 percent decline the previous month, according to the median estimate of economists surveyed by Bloomberg.

Novartis gained 0.7 percent to 51.90 Swiss francs as the company said Afinitor extended the time without tumor growth for women with advanced breast cancer in a clinical trial. Novartis said it plans to seek regulatory approval for the treatment by the end of the year.

“Data from this trial were not expected until 2012, hence reaching the primary endpoint ahead of time makes us hopeful that the treatment effect will be clinically significant,” Andrew Weiss, an analyst at Vontobel Holding AG, wrote in a note to clients today.

Swisscom climbed 0.6 percent to 386.6 francs after Carola Bardelli, an equity analyst at Deutsche Bank AG, raised the company’s shares to “buy” from “hold.”

Swatch, Richemont

Swatch Group AG, the world’s largest watch maker, rose 1.1 percent to 435.9 francs and Cie. Financiere Richemont, the owner of the Cartier brand, gained 1.6 percent to 56.55 francs after Hong Kong jewelry, watches and clocks sales rose 61 percent year-on-year in May, following a 55 percent gain in April.

Givaudan dropped 3.1 percent to 873 francs as HSBC Holdings Plc cut its price estimate to 1,020 francs from 1,070 francs on lower estimates.

Swissmetal tumbled 18 percent to 4.20 francs, the lowest price since at least 1989, after being forced to shut a plant in Dornach, Switzerland that had been used as bank collateral. Swissmetal’s board and management are trying to find a “stabilization of liquidity” and are holding talks with the unidentified bank tomorrow, according to a statement.

Credit Suisse Group AG, Switzerland’s second-biggest bank, lost 0.5 percent to 33.24 francs.

Standard & Poor’s and Fitch Ratings may enable European Central Bank President Jean-Claude Trichet to support a private investor rollover of Greek debt by saying a default rating would be partial and temporary.

Trichet put Greece’s fate in the hands of ratings companies when officials began saying in May that the ECB, which has lent 98 billion euros ($142 billion) to Greek banks, would refuse to accept the nation’s bonds as collateral if any “burden sharing” by private investors produced a default rating.

--With assistance from Simone Meier in Zurich. Editor: Andrew Rummer

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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