Bloomberg News

Swiss Stocks Fall for Third Day; Credit Suisse, Julius Baer Slip

October 04, 2011

Oct. 4 (Bloomberg) -- Swiss stocks declined for a third day as concern escalated that policy makers aren’t close to resolving Europe’s sovereign-debt crisis and that global growth will stall.

Julius Baer Group Ltd., the country’s fifth-biggest wealth manager, and Credit Suisse Group AG dropped more than 2.5 percent. Transocean Ltd. slid 6.3 percent as oil fell. UBS AG rose 1.4 percent after saying it expects a “modest” third- quarter profit.

The Swiss Market Index, a measure of the biggest and most actively traded companies, slid 0.9 percent to 5,444.55 at the 5:30 p.m. close in Zurich. The gauge has retreated 19 percent from its high this year on Feb. 18. The broader Swiss Performance Index decreased 1.1 percent today.

“Markets are beginning to come to the conclusion that ministers are far too behind the curve to get a handle on the crisis and that having so many different bureaucracies involved makes the probability of any unified agreement any time soon a slim probability,” Jonathan Sudaria, a trader at London Capital Group, wrote. “With such a negative environment, traders will remain highly risk averse.”

Euro-area finance ministers meeting yesterday considered “technical revisions” to a July deal for a second Greek aid package, fueling concern that bondholders may have to take bigger losses on the nation’s debt.

Luxembourg’s Prime Minister Jean-Claude Juncker, who chaired the meeting, said the ministers considered reshaping the private sector’s 50 billion-euro ($67 billion) involvement in July’s 159 billion-euro rescue. The package included debt exchange and rollover.

Goldman Cuts Forecasts

Goldman Sachs Group Inc. cut its global growth forecast for this year and next and predicted recession in Germany and France as the European economy stalls and the risk of a contraction in the U.S. grows. The world economy will probably expand 3.8 percent this year and 3.5 percent in 2012, compared with earlier estimates of 3.9 percent for 2011 and 4.2 percent for next year, Goldman Sachs economists Jan Hatzius and Dominic Wilson wrote in an Oct. 3 report.

Julius Baer sank 2.7 percent to 29.59 Swiss francs. Credit Suisse fell 3.5 percent to 22.10 francs.

Transocean, the biggest offshore drilling contractor, slid 6.3 percent to 40.92 francs as oil fell for a third day in New York after the chairman of Libya’s state-run National Oil Corp. said the country’s production will rise to more than 500,000 barrels a day by the end of this month.

ABB, UBS

ABB Ltd., the world’s largest maker of power-transmission gear, tumbled 3.4 percent to 15 francs. JPMorgan Chase & Co. cut its 2012-2013 earnings-per-share estimates for electrical engineers a further 5 percent to 10 percent.

UBS, Switzerland’s biggest bank, rose 1.4 percent to 10.23 francs as the Zurich-based bank forecast a “modest” third- quarter profit as gains from wider credit spreads and the sale of bonds cushion its $2.3 billion loss from unauthorized trading.

UBS said last month it may be unprofitable in the quarter after discovering losses from unauthorized trading at its investment bank.

--Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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