Bloomberg News

Swiss Stocks Rise as EU Finance Ministers Meet on Crisis

November 30, 2011

Nov. 29 (Bloomberg) -- Swiss stocks closed higher as euro- area finance ministers met to discuss insuring a portion of bonds issued by debt-stricken countries and an Italian bond auction was oversubscribed by investors.

UBS AG and Zurich Financial Services AG, the largest Swiss bank and insurer respectively, each rose at least 1.3 percent. Transocean Ltd., the biggest provider of offshore drilling rigs, dropped 8.7 percent after selling shares.

The Swiss Market Index, a measure of the largest and most actively traded companies, edged up 0.2 percent to 5,531.24 at the 5:30 p.m. close in Zurich, shifting between gains and losses all day. The gauge has rebounded 15 percent from this year’s low on Aug. 10 amid speculation that policy makers will act to resolve the 17-member euro region’s debt crisis. The Swiss Performance Index advanced less than 0.2 percent today.

“The bad news is that Italian rates are still very high,” said Henrik Henriksen, chief investment strategist at PFA Pension A/S, which manages $45 billion in Copenhagen. “The good news is that someone actually wants to buy Italian bonds,”

Italy was again forced to pay above the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts when it sold 7.5 billion euros ($10 billion) in bonds today, short of the maximum target for the auction.

Demand for a 2014 bond was 1.5 times the amount sold, while the bid-to-cover ratio for a 2022 bond was 1.34 times. That compared respectively with 1.35 times and 1.27 times at the previous auction on Oct. 28 auction.

UBS advanced 1.4 percent to 10.68 Swiss francs after the auction and Zurich Financial Services rose 1.3 percent to 196.10 francs.

Finance Ministers Meet

Euro-area finance ministers are meeting in Brussels to debate using their bailout fund, the European Financial Stability Facility, to insure sovereign debt with guarantees.

President Barack Obama said agreeing on a sufficient response to Europe’s problems is of “huge importance” to the U.S., after meeting yesterday with European Union President Herman Van Rompuy and European Commission President Jose Barroso.

Moody’s Investors Services put 87 European lenders under review for downgrade as subordinated, junior-subordinated or Tier 3 debt ratings incorporates an assumption of government support. Julius Baer Group Ltd., Switzerland’s largest publicly traded private bank, declined 1.7 percent to 31.43 francs.

Transocean dropped 3.72 francs to 39.20 francs, the most since Nov. 3, after saying it will sell shares to help refinance its acquisition of Aker Drilling ASA.

The offering for 26 million shares would allow the Zug, Switzerland-based rig-owner to buy back $1.7 billion in debt, the company said in a statement. The sale represents up to 8.9 percent of the company’s total issued and outstanding shares.

--Editors: Randall Hackley, Jennifer M. Freedman

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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