Bloomberg News

Swiss Stocks Drop as UBS, Credit Suisse Fall on Capital Concern

January 06, 2012

Jan. 5 (Bloomberg) -- Stocks in Switzerland fell, halting a five-day rally for the Swiss Market Index, as concern mounted that European banks will have to raise further capital.

UBS AG and Credit Suisse Group AG, the country’s biggest banks, followed a gauge of European lenders lower. Holcim Ltd. slipped after Credit Suisse cut its recommendation on the building-materials industry.

The SMI, a measure of the biggest and most actively traded companies, lost 0.5 percent to 6,026.57 at the close in Zurich. The broader Swiss Performance Index slid 0.6 percent.

“After the recent rally, the market is coming back to reality,” said Yves Marcais, a sales trader at Global Equities in Paris. “There are challenges to face in the first half of the year, such as ratings in Europe and Italian bond sales. The ghosts of the second half of last year are returning.”

France sold 7.96 billion euros ($10.2 billion) of debt, with 10-year borrowing costs rising in the country’s first bond auction of the year. The government sold 4.02 billion euros of 3.25 percent 2021 bonds at an average yield of 3.29 percent compared with 3.18 percent for 10-year debt auctioned on Dec. 1, Agence France Tresor said.

In the U.S., the ADP Employer Services report showed that American companies added 325,000 workers to their payrolls in December, nearly double the 178,000 net hires that economists had predicted. A Labor Department report tomorrow may show that payrolls rose by 150,000 last month, not enough to prevent the unemployment rate from climbing to 8.7 percent, economists in a Bloomberg survey projected.

The Institute for Supply Management’s index of non- manufacturing industries, which accounts for about 90 percent of the economy, rose to 52.6 in December from 52 a month earlier. The Tempe, Arizona-based group’s measure was projected to increase to 53, according to the median forecast in a Bloomberg News survey.

Swiss National Bank

Central bank President Philipp Hildebrand refused to resign from the Swiss National Bank and expressed regret that he didn’t curb his wife’s currency trading.

“I acted not only according to the rules, but also in an appropriate manner,” he said in Zurich today. “I am not aware of any breach of laws. But I understand that the public is having some questions.”

Hildebrand came under pressure to explain how he can act as the guardian of the Swiss franc and allow his wife to trade the currency at the same time. His wife’s purchase of dollars in August came three weeks before policy makers announced their biggest franc intervention since the 1970s.

UBS sank 3.3 percent to 11.19 francs and Credit Suisse retreated 4.4 percent to 21.80 francs. Bank stocks in the Stoxx Europe 600 Index lost 3.2 percent for the worst performance among the 19 industry groups.

Holcim Ltd., the world’s second-biggest cement maker, decreased 1.9 percent to 51.30 francs. The building-materials industry was cut to “market weight” from “overweight” at Credit Suisse.

--Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Adria Cimino in Paris at

To contact the editor responsible for this story: Andrew Rummer at

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