Bloomberg News

Swiss Stocks Retreat From Three-Month High; Banks Decline

November 01, 2011

Oct. 31 (Bloomberg) -- Swiss stocks fell from a three-month high as some investors speculated that the euro area’s enlarged rescue fund will fail to halt the spread of the region’s sovereign debt crisis.

UBS AG and Credit Suisse Group AG, Switzerland’s two biggest banks, dropped more than 4 percent. ABB Ltd., the world’s largest maker of power-transmission gear, and Adecco SA, the biggest supplier of temporary workers, led losses among companies most vulnerable to a slowing economy.

The benchmark Swiss Market Index, a measure of the largest and most actively traded companies, lost 2.1 percent to 5,731.27 at the close in Zurich. The SMI rallied 1.7 percent last week to its highest level since July 28, after the euro area’s leaders agreed to expand the region’s bailout fund and recapitalize banks. The gauge has climbed 3.6 percent in October, its biggest monthly rally since February 2010. The broader Swiss Performance Index dropped 2 percent today.

Italian, Spanish and Belgian bonds declined today as concern mounted that the European Union’s plan won’t halt the spread of the region’s debt crisis from Greece. Strategists led by Alain Bokobza at Societe Generale SA said the crisis isn’t over.

“Don’t be too greedy,” Bokobza’s asset-allocation team in Paris wrote in a report dated today. “Expect a bumpy road towards solving the issues faced by the EU, as the sovereign debt market is still dislocated.”

Banks Decline

UBS fell 6.4 percent to 11.21 Swiss francs. Credit Suisse lost 4.4 percent to 25.60 francs. The Stoxx 600 Banks Index of 50 European lenders dropped 4.7 percent even after Barclays Plc of the U.K. reported quarterly earnings that beat estimates.

ABB declined 3.9 percent to 16.92 francs. Adecco slid 6.1 percent to 42.41 francs.

OC Oerlikon Corp. sank 5.9 percent to 5.29 francs. The manufacturer of industrial equipment was rated new “underperform” at Credit Suisse. “The global textile machinery industry has recently entered a marked downturn which could impact Oerlikon’s earnings significantly,” the brokerage said in a report to investors.

Lonza Group AG, the world’s biggest maker of drug ingredients, tumbled 3.5 percent to 58.60 francs. The stock was downgraded to “sell” from “neutral” at Citigroup Inc.

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

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 at arummer@bloomberg.net


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