Bloomberg News

Swiss Stocks Slide Amid Greek Default Concern as Insurers Slide

September 12, 2011

Sept. 12 (Bloomberg) -- Swiss stocks declined for a second day amid speculation that the German government is preparing for Greece to default on its sovereign debt.

Zurich Financial Services AG, the biggest Swiss insurer, fell 4.3 percent. Panalpina Welttransport Holding AG, the second-largest Swiss transport company, slipped 5.9 percent. Adecco SA, the largest supplier of temporary workers, dropped 2.9 percent.

The Swiss Market Index, a measure of the 20 biggest and most actively traded companies, decreased 2.4 percent to 5,303.14 at the 5:30 p.m. in Zurich. The benchmark measure rose 1.3 percent last week as the central bank set a ceiling on the Swiss franc’s exchange rate for the first time in more than three decades. The broader Swiss Performance Index lost 2.3 percent today.

“Volatility around the euro zone is rising to new heights as the Germans may be preparing for a Greek default,” said Witold Bahrke, a senior strategist at PFA Pension A/S, which manages $45 billion, in Copenhagen. “The likelihood of the more extreme scenarios like a disorderly Greek default, which people didn’t really believe in before, is growing.”

Officials in German Chancellor Angela Merkel’s government are debating how to shore up domestic banks should Greece fail to meet the budget-cutting terms of its aid package, three coalition officials said on Sept. 9.

Banking Stocks

A gauge of European banks dropped 4.6 percent, for the worst performance on the Stoxx Europe 600 Index, as two people with knowledge of the matter said Moody’s Investors Service may cut the ratings of the three biggest French banks -- BNP Paribas SA, Societe Generale SA and Credit Agricole SA -- this week because of their holdings of Greek sovereign debt.

In Zurich, UBS AG, the biggest Swiss lender, fell 2.4 percent to 10.30 francs. Julius Baer Group Ltd., the 121-year- old Swiss wealth manager, dropped 3.3 percent to 28.50 francs.

Swiss Reinsurance Co. declined 2.9 percent to 37.49 francs. Europe’s second-biggest re-insurer said in an e-mailed statement that the current economic environment with “volatile stock markets” poses a “significant challenge” to the industry. Zurich Financial Services lost 4.3 percent to 159.50 francs as insurers were among the worst performers in the Stoxx 600.

The cost of insuring corporate debt rose to the highest level in 2 1/2 years, according to JPMorgan. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 5 basis points to 197.

The benchmark index for European stock options climbed to its highest level since January 2009. The VStoxx Index, which measures the cost of protecting against a decline in shares on the Euro Stoxx 50 Index, rose 7.5 percent to 53.55 in Frankfurt, having earlier climbed as much as 13 percent.

Panalpina sank 5.9 percent to 76.20 francs. Adecco slipped 2.9 percent to 32.68 francs. Holcim Ltd., the world’s second- biggest cement maker, dropped 2.7 percent to 44.27 francs.

--Editor: Will Hadfield

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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