Bloomberg News

Stocks in Switzerland Advance as Central Banks Cut Swap Rates

November 30, 2011

Nov. 30 (Bloomberg) -- Swiss stocks climbed, posting their biggest four-day rally since September, as the Swiss National Bank and five other central banks announced they will lower interest rates on swap lines.

Clariant AG, the world’s largest maker of printing-ink chemicals, advanced as did health-care companies including Actelion Ltd. UBS AG and Credit Suisse Group AG climbed as a gauge of European banks rose 4.4 percent after China cut the reserve ratio for lenders for the first time since 2008.

The Swiss Market Index, a measure of the largest and most actively traded companies, rallied 2.2 percent to 5,652.31 at the close in Zurich, having earlier dropped as much as 0.8 percent. The gauge has rebounded 18 percent from this year’s low on Aug. 10 amid speculation that policy makers will act to resolve the euro area’s debt crisis. The Swiss Performance Index gained 2.3 percent today.

The SMI has still dropped 1.6 percent in November as Italian bond yields surged and euro-area policy makers struggled to agree on a plan to contain the region’s sovereign-debt crisis.

“Liquidity has been a problem,” said Henrik Drusebjerg, who helps oversee $230 billion as senior strategist at Nordea Bank AB in Copenhagen. “You have central banks acting in a coordinated manner, you had China moving today too and you have the hope that European politicians will use their next meeting to get in front of the problem instead of being behind.”

China cut the amount of cash that banks must set aside as reserves for the first time since 2008.

Swap Rates Cut

The Swiss National Bank, the Federal Reserve and four other central banks reduced the cost of emergency dollar funding for European banks as part of a globally coordinated central-bank response to the continent’s sovereign-debt crisis.

Euro-area finance ministers agreed on a plan to guarantee as much as 30 percent of new bond issues from the region’s most- indebted governments and to develop investment vehicles to boost their bailout fund’s ability to act in primary and secondary bond markets.

European heads of government meet on Dec. 9 in Brussels, with Germany pushing for governance changes that would tighten enforcement of budget rules. The move might make it easier for the European Central Bank to play a bigger part in supporting euro-area nations, possibly channeling loans through the International Monetary Fund, two officials familiar with the matter said yesterday.

Swiss Economic Indicator

Switzerland’s KOF economic indicator fell to its lowest level in more than two years in November, adding to signs of a deepening slowdown. The monthly gauge, which aims to predict the economy’s direction about six months ahead, dropped to 0.35 from a revised 0.75 in October, the KOF Swiss Economic Institute in Zurich said in an e-mailed statement today. That’s the lowest reading since August 2009. Economists had forecast a decline to 0.65, according to the median of 11 estimates in a Bloomberg News survey.

Clariant AG, the world’s largest maker of printing-ink chemicals, jumped 5.7 percent to 8.93 Swiss francs. The company may sell euro-denominated bonds after hiring banks to arrange a conference call with bond investors, according to a banker involved in the transaction.

Actelion Ltd., Switzerland’s biggest biotechnology company, gained 5.5 percent to 31.80 francs and Nobel Biocare AG, the second-biggest maker of dental implants by sales, jumped 8.3 percent to 11.57 francs.

Roche Holding AG, the world’s biggest maker of cancer drugs, added 2.4 percent to 145 francs as Citigroup Inc. rated the stock a new “buy” with a price estimate of 159 francs.

UBS and Credit Suisse gained 4.7 percent to 11.18 francs and 4.7 percent to 21.96 francs, respectively, as a gauge of European banks was among the best performers of the 19 industry groups in the Stoxx Europe 600 Index.

--Editors: Will Hadfield, Thomas Mulier

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