Bloomberg News

Swiss Stocks Advance Before European Summit; UBS, Straumann Rise

October 21, 2011

Oct. 21 (Bloomberg) -- Swiss stocks climbed the most in more than two weeks as speculation intensified that euro-area governments will unleash $1.3 trillion in funds in an effort to stem the region’s sovereign debt crisis.

UBS AG and Credit Suisse Group AG, Switzerland’s largest banks, gained more than 3.8 percent. Straumann Holding AG, the world’s biggest dental-implant maker, gained 4.6 percent after Jefferies Group Inc. reiterated its “buy” rating on the stock.

The Swiss Market Index, a measure of the biggest and most actively traded companies, advanced 1.7 percent to 5,753.52 at the close in Zurich, the most since Oct. 6. Even so, the gauge has tumbled 11 percent this year. The broader Swiss Performance Index also increased 1.7 percent today.

“Market participants look ahead with excitement at the EU summit on Sunday,” Christian Schmidt, a technical analyst for equities at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in a report today. “Hopes are high after the leverage effect has been discussed in more detail this week. In our view, a potential for disappointment exists so the risk appetite of market participants is not likely to increase.”

Euro-area governments may pool their temporary and permanent rescue funds, providing as much as 940 billion euros ($1.3 trillion) to fight the debt crisis, seeking to break a deadlock between Germany and France that has forced leaders to hold two summits in four days.

Rescue Funds

Negotiations on combining the European Union’s rescue funds from mid-2012 and scrapping a ceiling on bailout spending accelerated this week after efforts to leverage the temporary fund ran into European Central Bank opposition and provoked the French-German clash, two people familiar with the discussions said. They declined to be identified because political leaders will have to decide.

Finance ministers are meeting in Brussels today to lay the groundwork for an Oct. 23 meeting of government leaders. A second summit for Oct. 26 was scheduled yesterday after Germany and France said the EU needs more time to seal a “global and ambitious” accord.

Stocks extended their gains after Fitch Ratings said it has no plans to change France’s AAA rating and as International Monetary Fund Managing Director Christine Lagarde said the fund will do all it can to help the EU solve its debt crisis.

Banks, Insurers Rise

UBS advanced 3.9 percent to 10.99 Swiss francs and Credit Suisse climbed 3.8 percent to 23.86 francs as a gauge of European banks was the third-best performer of the 19 industry groups on the Stoxx Europe 600 Index, jumping 3.8 percent.

Zurich Financial Services AG, the country’s biggest insurer, rose 2.3 percent to 200.70 francs while Swiss Reinsurance Co., the world’s second-largest reinsurer, added 3.6 percent to 46.93 francs.

Straumann gained 4.6 percent to 156.10 francs as Stephan Gasteyger, an analyst at Jefferies, said he retains his “buy” rating on the stock because it has strong balance sheets. He also said the share price reflects little or no sales growth in 2012.

Nobel Biocare Holding AG soared 9.4 percent to 9.94 francs, the most since August 2009 amid speculation it might be a takeover target. Christophe Ochsner of Mirabaud Securities LLP in Geneva said the company has been a potential M&A target for years. He added the company has a “very weak shareholders structure,” so it “would make sense for an industry rival to come in, boost efficiency and improve earnings.”

Temenos Group AG, the banking-software maker, dropped 1.4 percent to 14.45 francs after UniCredit SpA cut the stock to “hold” from “buy.”

--Editors: Will Hadfield, 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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