Bloomberg News

Swiss Stocks Advance on Optimism Europe Will Expand Bailout Fund

October 19, 2011

Oct. 19 (Bloomberg) -- Swiss stocks rose, snapping a two- day decline, as financial shares advanced following conflicting reports that Europe’s biggest economies have reached a deal on enhancing a rescue fund for the region.

UBS AG gained 2.3 percent as the Guardian reported Germany and France have agreed to boost the European Financial Stability Facility to 2 trillion euros ($2.8 trillion) from 440 billion euros. Sonova Holding AG jumped to the highest price since June after saying sales of hearing aids rose.

The Swiss Market Index, a measure of the biggest and most actively traded companies, climbed 0.3 percent to 5,699.98 at the close in Zurich. Even so, the gauge has still tumbled 11 percent this year as Europe’s debt crisis and disappointing U.S. economic reports fueled concern the global recovery is faltering. The broader Swiss Performance Index added 0.4 percent today.

“Financial press reports have helped refuel hopes and optimism over a solution for the bailout fund,” said Trung-Tin Nguyen, a hedge-fund manager at TTN AG in Zurich. “Corporate earnings were solid and helped sustain the rally.”

While the Guardian reported that France and Germany had agreed to boost the EFSF to 2 trillion euros, the Financial Times Deutschland said that German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that the EFSF’s firepower may be increased to a maximum of 1 trillion euros through an insurance model.

’Still Working’

France and Germany are still working on how to increase the effective power of the rescue fund, a person with direct knowledge of the talks told Bloomberg News. Such a measure needs to be part of a comprehensive agreement to help banks and Greece, said the person who declined to be named.

German Chancellor Angela Merkel late yesterday said that the euro-area summit on Oct. 23 will mark an “important step,” though not the final one, in solving the debt crisis. The comments marked the second time in two days that she sought to lower expectations.

“The market is for sure optimistic that there will be a ‘big shot’ solution over the long-term,” Nguyen said.

A U.S. Commerce Department report showed that housing starts in the world’s largest economy increased more than forecast in September.

Builders began work on 658,000 houses at an annual rate, up 15 percent from August and the most since April 2010, data showed. The median forecast in a Bloomberg News survey called for a 590,000 pace. Multifamily home starts surged to the highest since October 2008.

Banks Rally

Financial shares paced gains, with UBS, Switzerland’s largest lender, advancing 2.3 percent to 10.74 Swiss francs. Zurich Financial Services AG, the country’s biggest insurer, climbed 2 percent to 200.40 francs and Baloise Holding AG rose 2 percent to 69.40 francs.

Sonova, a maker of hearing health-care products, soared 13 percent to 86.75 francs, its highest price since June 10. The volume of trading in its shares surged to 2 1/2 times the average in the last three months. Sales of hearing aids increased 7 percent in the first half excluding acquisitions, the company said today.

Holcim Ltd., the world’s second-biggest cement maker. gained 1.5 percent to 53.20 francs.

--Editors: Srinivasan Sivabalan, Randall Hackley

To contact the reporter on this story: Alexis Xydias in London at

To contact the editor responsible for this story: Andrew Rummer at

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