Bloomberg News

Swiss Stocks Are Little Changed; Novartis, Petroplus Decline

December 29, 2011

Dec. 29 (Bloomberg) -- Swiss stocks were little changed as Italy raised less than the maximum target at a debt auction and U.S. claims for jobless benefits increased, offsetting data that showed American business activity topped forecasts.

Novartis AG and UBS AG led declines. Petroplus Holdings AG, Europe’s largest independent refiner, retreated for a fourth day. Syngenta AG, the world’s biggest maker of agricultural chemicals, advanced 1.1 percent.

The Swiss Market Index, a measure of the biggest and most actively traded companies, increased less than 0.1 percent to 5,896.6 at the close in Zurich. The gauge has rebounded 23 percent from this year’s low on Aug. 10 as the euro area’s policy makers intensified their efforts to resolve the region’s debt crisis. The SMI is still headed for an 8.4 percent decline in 2011, its worst annual performance since 2008. The broader Swiss Performance Index rose 0.1 percent today.

“As much as the investors appreciated the introduction of austerity measures by the Italian government, a far more important issue is Italy’s growth potential while the country is maintaining fiscal discipline,” said Anita Paluch, a senior sales trader at Gekko Global Markets Ltd. in London. “This is what Italy needs to convince the markets of.”

Italy sold 2.5 billion euros ($3.2 billion) of bonds due in 2014, less than the 3 billion euro maximum for the sale, to yield 5.62 percent, down from 7.89 percent at the previous sale on Nov. 29. The Treasury priced 2.5 billion euros of its 5 percent 2022 bond to yield 6.98 percent, compared with 7.56 percent on Nov. 29. It also sold about 2 billion euros of bonds due 2021 and a floating-rate security due 2018.

ECB Loans

The sale came one day after Italy auctioned 9 billion euros in treasury bills for 3.251 percent, about half the rate from the previous auction on Nov. 25, after the European Central Bank last week offered banks unlimited funds for three years.

German Chancellor Angela Merkel and French President Nicolas Sarkozy may meet on Jan. 9 in Berlin to discuss the debt crisis, the Wall Street Journal reported, citing an unidentified European Union official familiar with the situation.

A report showed Americans filed more applications for unemployment benefits than forecast by economists last week. Claims rose for the first time in a month in the week ended Dec. 24, climbing by a more-than-estimated 15,000 to 381,000.

Business Activity

Meanwhile, the Institute for Supply Management-Chicago Inc. said its business barometer decreased to 62.5 this month from 62.6 in November. Readings above 50 signal growth. Economists forecast the gauge would fall to 61, according to the median of 49 estimates in a Bloomberg survey.

Novartis, Europe’s second-biggest drugmaker by sales, declined 0.4 percent to 53.25 francs. The company accounts for more than 19 percent of the SMI Index by weighting. UBS, Switzerland’s largest bank, dropped 0.2 percent to 11.05 francs. The lender accounts for more than 5 percent of the SMI by weighting.

Petroplus reversed earlier gains of as much as 9.1 percent to close 0.6 percent lower at 1.64 francs. That’s the lowest price on record for the stock. The French government is “fully mobilized” in helping Europe’s largest independent refiner in discussions with its banks, Finance Minister Francois Baroin and Industry Minister Eric Besson said in a statement yesterday after the markets closed.

Lenders froze about $1 billion in uncommitted loans that the company needs to buy crude for its five European oil refineries. The company may begin shutting down operations at its Petit Couronne refinery in France on Jan. 2, a union representative said.

Syngenta climbed 1.1 percent to 274.30 francs for the biggest gain in the SMI.

--Editors: Srinivasan Sivabalan, Andrew Rummer

To contact the reporters on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net; Julie Cruz in Frankfurt at jcruz6@bloomberg.net

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


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