Stocks in Switzerland retreated the most in a week after Federal Reserve Chairman Ben S. Bernanke said the central bank may cut bond purchases later this year if the world’s largest economy strengthens.
UBS AG (UBSN) and Credit Suisse (CSGN) Group AG, Switzerland’s largest lenders, dropped after the Swiss National Bank said they need to improve their leverage ratios. Swatch Group AG and Cie. Financiere Richemont SA slumped as Swiss watch exports fell in May. Feintool International Holding AG rose 1.6 percent.
The Swiss Market Index (SMI) lost 1.5 percent to 7,615.48 at 10:17 a.m. in Zurich. The benchmark gauge is heading for its fifth weekly decline amid speculation the Fed will start to reduce its bond-purchasing program as early as September. The broader Swiss Performance Index (SPI) declined 1.4 percent today.
“On the one hand, markets are being prepared for an end to the bond purchases soon; on the other hand, it shows that it won’t happen immediately,” Peter Buergler, a trader at Luzerner Kantonalbank AG, wrote in a report today. “But markets have reacted disappointed. They still depend on the drip of the ample liquidity injections by central banks.”
The number of shares trading hands in SMI-listed companies was 42 percent higher than the average of the past 30 days, data compiled by Bloomberg show.
The Fed may “moderate” the pace of bond purchases later this year and could end them around mid-2014, Bernanke said late yesterday. The Federal Open Market Committee said at the conclusion of a two-day meeting in Washington that risks to the outlook for the economy and the labor market have diminished.
The central bank said it will keep buying bonds at a pace of $85 billion a month, and repeated that it’s prepared to increase or reduce the pace of purchases depending on the outlook for the job market and inflation.
Credit Suisse slid 2.8 percent to 25.73 Swiss francs and UBS slipped 1.4 percent to 16.39 francs. The banks still need to improve their ratios of capital compared with total assets as risk-weighted models are being called into question, the Swiss central bank said today.
Swatch, the biggest maker of Swiss watches, sank 4 percent to 513 francs, while Richemont, the owner of the Cartier brand, fell 3.5 percent to 82.10 francs. Swiss watch exports declined 3.9 percent last month, the Federal Customs Office said today.
Feintool (FTON) jumped 4.8 percent to 65 francs. The supplier of metal-cutting equipment said it sold 1.49 million registered shares at 62 francs each as part of a capital restructuring process.
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