Bloomberg News

Swiss Stocks Rise as Euro-Area Leaders Deliver Debt Rescue Plan

October 27, 2011

Oct. 27 (Bloomberg) -- Swiss stocks rallied to a three- month high as a 10-hour summit of European leaders agreed to expand the region’s bailout fund, recapitalize banks and push for greater budget control among euro-area countries.

Financial shares rose as UBS AG and Credit Suisse Group AG advanced more than 8 percent. Adecco SA, the world’s largest supplier of temporary workers, increased 6.5 percent. Transocean Ltd., the biggest provider of offshore oil drilling rigs, climbed 3.3 percent as crude futures rose. Logitech International SA jumped the most in four years as the largest maker of computer mice confirmed its guidance.

The Swiss Market Index, a measure of the biggest and most actively traded companies, advanced 2.2 percent to 5,823 at the close in Zurich, the highest since July 28. The gauge has rallied 22 percent from its low on Aug. 10., entering a bull market, amid speculation euro-area leaders would shield banks and the Italian and Spanish economies from a possible Greek default. The Swiss Performance Index rose 2.3 percent today.

“Euro-zone leaders delivered what they were supposed to,” said Witold Bahrke, a Copenhagen-based senior strategist at PFA Pension A/S, which manages $45 billion. “We’re still short of some details, but this will cater for decreased financial stress and thus an increased macroeconomic outlook for the euro zone, though recession risk is still very high.”

Rescue Fund Firepower

Late night brinkmanship at the second crisis summit in four days yesterday delivered a plan that the euro area’s stewards said points the way out of the debt quagmire. Last-ditch talks with bank representatives led to a debt-relief accord, which will see bondholders take a 50 percent loss on Greek debt and boost the firepower of the rescue fund to 1 trillion euros ($1.4 trillion).

The plan aims to quarantine the risk of a possible Greek default from triggering speculation against Italy and France, which would ravage the euro area and dampen global economic growth. Other measures included recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market.

The U.S. economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support the recovery. Gross domestic product rose at a 2.5 percent annual rate, matching the median forecast of economists surveyed by Bloomberg News, Commerce Department figures showed today.

Banks Rally

UBS and Credit Suisse, the biggest Swiss banks, rose 8.1 percent to 11.92 Swiss francs and 11 percent to 27.12 francs, respectively. Julius Baer Group Ltd., the 121-year-old wealth manager, gained 4.7 percent to 36.10 francs.

Swiss Re Ltd. the world’s second biggest reinsurer, increased 4.5 percent to 49.27 francs. Zurich Financial Services AG, the largest Swiss insurer, advanced 4.4 percent to 210.80 francs. A gauge of insurers in the Stoxx Europe 600 Index jumped 7.2 percent for the biggest gain since May 2010.

Adecco rose 6.5 percent to 44 francs. Transocean advanced 3.3 percent to 50.65 francs as oil gained more than 2.5 percent in New York trading.

Logitech jumped 16 percent to 8.94 francs, the largest increase since October 2007. The company confirmed its full-year outlook for operating profit to be around $90 million and sales of $2.4 billion after cutting profit forecasts for the second time in two months on Sept. 22.

Syngenta AG, the biggest maker of crop protection chemicals, advanced 1.6 percent to 273.50 francs after third- quarter earnings from BASF AG and Bayer AG, Germany’s largest chemical makers, beat estimates and Bayer raised the forecast for its agricultural chemicals business. Clariant AG, the largest maker of printing-ink chemicals, gained 4.8 percent to 9.75 francs.

--Editors: Andrew Rummer, James Kraus

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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