Swiss stocks fell, with the Swiss Market Index heading for its lowest close in seven weeks, as Japanese equities entered a bear market and speculation grew that central banks may scale back stimulus measures.
Nestle SA (NESN) lost 1 percent, contributing the most to declines in Switzerland. Cie. Financiere Richemont SA, the owner of the Cartier brand, slid 2 percent to a four-week low. Holcim Ltd. lost 2.2 percent as shares of European cement makers dropped.
The SMI dropped 0.6 percent to 7,612.7 at 3:51 p.m. in Zurich. The gauge trimmed an earlier slide of as much as 1.7 percent as U.S. retail sales increased more than forecast. The equity benchmark is heading for a fourth week of declines, the longest stretch of losses in a year, and has pared this year’s advance to 12 percent.
“The main fear is still that central banks are going to pare stimulus and print less money, which has been the main driver for equity markets,” said Urs Beck, a portfolio manager for Swiss equities at Zuercher Kantonalbank AG, which oversees about 191.4 billion Swiss francs ($207 billion). “The market has become more vulnerable and volatile lately, and now a bear market has been called in Japan.”
The number of shares changing hands on SMI-listed companies today was 20 percent higher than the average of the past 30 days, Bloomberg data show. The broader Swiss Performance Index (SPI) slid 0.6 percent.
Japanese stocks plunged, with the Nikkei 225 Stock Average sliding more than 20 percent from its May 22 high, as the yen rose to its strongest level against the dollar in two months.
In the U.S., retail sales rose 0.6 percent last month, the biggest increase in three months, Commerce Department figures showed today. The median forecast of economists surveyed by Bloomberg called for a 0.4 percent advance.
Fewer Americans than forecast filed applications for unemployment benefits last week, Labor Department data showed.
The Federal Reserve will hold its two-day policy meeting next week, with Chairman Ben S. Bernanke scheduled to speak after the central bank’s decision on June 19. The SMI has tumbled 9.5 percent since May 22 as Bernanke said the central bank may scale back its bond-buying program if the U.S. labor market “improves in a real and sustainable way.”
The VSMI index, which measures the cost of options hedging against price swings in Swiss shares, climbed 1.5 percent to 20.03, a third day of gains.
“On days of high volatility, you might try to hide in higher quality defensive Swiss stocks,” Beck said. “Still, these stocks are the most liquid in Switzerland and even defensives don’t behave defensive on days like today.”
Nestle, which makes up 22 percent of the SMI (SMI) by weight, lost 1 percent to 61.6 francs. Exane BNP Paribas cut its price target on the stock to 72 francs from 74 francs, saying weakness in emerging-market currencies may hurt earnings. UBS also reduced its price target by 2 percent to 65 francs.
Richemont, the world’s largest luxury jewelry maker, slid 2 percent to 80.5 francs. Swatch Group AG, the biggest maker of Swiss watches, declined 1.9 percent to 528 francs, the lowest price in two weeks.
Holcim fell 2.2 percent to 67.85 francs. The shares have lost 7.1 percent so far this week, which would be the biggest decline since November 2011.
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