Bloomberg News

Swiss Stocks Climb for Second Day; UBS, Swiss Re Lead Increase

October 06, 2011

Oct. 6 (Bloomberg) -- Swiss stocks rose for a second day amid speculation European policy makers will step up their efforts to contain the region’s debt crisis.

UBS AG and Credit Suisse Group AG, the country’s biggest banks, led the advance after European Commission President Jose Barroso said the body plans coordinated action to recapitalize banks. Swiss Re Ltd. climbed after the reinsurer said it “comfortably exceeds” the capital buffer required for a AA rating at Standard & Poor’s.

The Swiss Market Index, a measure of the largest and most actively traded companies, increased 2.5 percent to 5,640.07 at the 5:30 p.m. close in Zurich. The gauge has still tumbled 12 percent this year as concern grows that Greece will default and countries from Italy to Spain face higher borrowing costs. The broader Swiss Performance Index added 2.4 percent today.

“In Europe, the gloomiest assumptions about the debt crisis are being priced in,” said Milan-based Giordano Lombardo, group chief investment officer at Pioneer Investments, which oversees $238 billion. “When market conditions become less volatile, conventional metrics such as price-to-earnings ratios or price-to-book ratios are likely to regain a key role and European equities should have more upside than other markets in this better environment.”

Claims for U.S. unemployment benefits increased last week less than forecast to a level that shows companies may be starting to slow the pace of dismissals, according to a report.

UBS, Credit Suisse

UBS, Switzerland’s largest bank, increased 4.5 percent to 10.97 Swiss francs. Francois Gouws and Yassine Bouhara resigned as co-heads of global equities following last month’s $2.3 billion loss from unauthorized trading, the bank said yesterday after markets closed. Mike Stewart, hired from Bank of America Corp. in July, will become the sole head of equities.

Credit Suisse, the nation’s second-biggest bank, gained 4.6 percent to 24.17 francs.

Financial shares in Europe extended their gains as Barroso said the European Union’s executive body will propose a plan to recapitalize banks. German Chancellor Angela Merkel said policy makers need to “look again” at whether European banks need additional capital.

“We are now proposing to the member states to have a coordinated action to recapitalize banks and so to get rid of toxic assets that they may have,” Barroso said today in a video question-and-answer session. Euro-region lenders may need more than 140 billion euros ($188 billion) through a program similar to the U.S. Troubled Asset Relief Program, Morgan Stanley analysts said.

Swiss Re, Adecco

Swiss Re, the world’s second-biggest reinsurer, rose 4.3 percent to 45.71 francs. The reinsurer said it exceeds a capital buffer of between $3 billion and $5 billion required for an S&P rating of AA. The company also said it has a Swiss Solvency Test ratio in excess of 200 percent, according to a presentation published on its website.

Adecco SA, the world’s biggest provider of temporary staffing, jumped 7.2 percent to 37.90 francs, its biggest gain since December 2009. Hays Plc, the London-based recruiting company, climbed 7.4 percent after the company said net fees rose 21 percent in the quarter ended September 30. Hays said business “remains robust” in international markets.

Nobel Biocare Holding AG, the second-largest maker of dental implants by sales, dropped 1.6 percent to 9.01 francs. The shares were cut to “sell” from “buy” at Citigroup Inc.

--With assistance from Adria Cimino in Paris. Editors: Srinivasan Sivabalan, Will Hadfield

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

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


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