Bloomberg News

Swiss Stocks Rise on German Vote, U.S. Economic Data; UBS Climbs

September 29, 2011

Sept. 29 (Bloomberg) -- Swiss stocks advanced to a two- month high as Germany backed an enhanced rescue fund for the euro area and U.S. economic data exceeded forecasts.

UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, jumped more than 2 percent. Lonza Group AG, the world’s biggest maker of drug ingredients, advanced 3.1 percent. Nobel Biocare AG, the second-largest maker of dental implants by sales, rallied 6.7 percent as UBS said it prefers its shares to those of rival Straumann Holding AG.

The Swiss Market Index, a measure of the biggest and most actively traded companies, climbed 1 percent to 5,608.6 at the 5:30 p.m. close in Zurich, after earlier falling as much as 0.5 percent. The gauge has tumbled 17 percent from its peak on Feb. 18 as the global recovery showed signs of faltering and the Greek debt crisis eluded resolution. The broader Swiss Performance Index also gained 0.9 percent today.

“There are questions how this debt is going to be dealt with and the Europeans have a clear calendar, a clear plan as to how they want to move forward,” Vikram Pandit, chief executive officer of Citigroup Inc., said in an interview with Bloomberg Television’s Susan Li. “Our core view remains the way it has been for a while, which is that the Europeans will figure it out. They’ll get through the debt crisis and they’ll get to the other side being fully committed to the euro.”

Germany’s lower house of parliament passed the expansion of the rescue fund with 523 votes in favor and 85 against, granting the fund powers to buy bonds in secondary markets, enable bank recapitalizations and offer precautionary credit lines.

U.S. Economy

A U.S. report today showed the U.S. economy grew at a 1.3 percent pace in the second quarter and initial applications for jobless benefits dropped by 37,000 in the week ended Sept. 24 to 391,000. Both numbers tempered concern the economic rebound was in jeopardy.

Even so, global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year with 72 percent predicting a country abandoning the euro as a shared currency within five years, a Bloomberg survey found.

About three-quarters of those questioned this week said the euro-area economy will fall into recession during the next 12 months and 53 percent said turmoil will worsen in a banking sector laden with government bonds, according to the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers. Forty percent see the 17-nation currency bloc losing at least one member in the next year.

Banks Gain

Financial shares rose, with UBS jumping 2.6 percent to 11.30 Swiss francs and Credit Suisse adding 3.4 percent to 24.96 francs. Swiss Life Holding AG gained 3.4 percent to 104.30 francs.

Lonza added 3.1 percent to 57.45 francs. The company said it received antitrust clearance in France for its tender offer for 100 percent of the outstanding shares of Arch Chemicals Inc.

Nobel Biocare jumped 6.7 percent to 9.40 francs after UBS analyst Martin Wales added the company to the brokerage’s “most preferred” list, while adding its rival, Straumann, to its “least preferred” list.

Swiss Re AG, the world’s second-biggest reinsurer, gained 3.9 percent to 43.70 francs. Chief Executive Officer Stefan Lippe said he is seeking to spend more of his company’s capital on underwriting as rival Warren Buffett allocated cash to buybacks. Buffett’s Berkshire Hathaway is the No. 4 reinsurer in the world.

‘Significant Opportunities’

“We assume there will be significant opportunities, and it will be very easy for us” to deploy capital in the business, Lippe said yesterday in an interview. A buyback is “part of our tool kit. But at the moment we’d rather like to explore the other possibilities we have.”

Adecco SA, the staffing company part-owned by the Jacobs family, added 3.8 percent to 38.55 francs. The company generated 19 percent of its revenue from North America in 2010.

Swatch Group AG, the world’s largest watchmaker, slumped 5.8 percent to 325 francs as luxury-goods companies retreated. Cie. Financiere Richemont SA, the owner of the Cartier brand, declined 6.7 percent to 43.21 francs. The stock was cut to “hold” from “buy” by Shamil Ismail, an analyst at Cadiz Securities.

Most global investors predict Chinese growth will slow to less than half the pace sustained since the government began dismantling Mao Zedong’s communist economy three decades ago, the Bloomberg poll indicated. Fifty-nine percent of respondents said China’s gross domestic product, which rose 9.5 percent last quarter, will gain less than 5 percent annually by 2016.

--Editors: Srinivasan Sivabalan, 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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