SMI Benchmark Declines as Holcim, Swatch Drop; ABB, Transocean Shares Rise

Swiss stocks fell for a third day as declines in Holcim Ltd. and luxury-goods makers offset an increase in Transocean Ltd. and ABB Ltd.

Holcim retreated 1.2 percent, following European construction shares lower. Swatch Group AG slid for a second day after being downgraded at Kepler Capital Markets. Transocean advanced 3.6 percent as it announced plans to sell debt for the first time in almost three years. ABB rose 1 percent as Goldman Sachs Group Inc. increased its price estimate on the world’s largest builder of electricity networks.

The Swiss Market Index lost 9.85, or 0.2 percent, to 6,424.16 at the 5:30 p.m. close in Zurich. Even so, the benchmark measure has gained 8.1 percent since reaching its low this year in July. The broader Swiss Performance Index declined 0.1 percent today.

“In the short term, we would suggest selling into strength as daily momentum indicators are moving toward over-bought extremes and low volatility implies investors are again optimistic and don’t see the risk,” said Manfred Hofer, head of equity analysis at LGT Capital Management AG in Pfaeffikon, Switzerland, which oversees about $73 billion. “In the long term, it’s not so important if a double dip occurs or not, what is important for us is the impact on companies’ earnings. There’s room for positive surprise as we regard 2011-2012 consensus earnings estimates as conservative.”

Philadelphia Fed

Manufacturing in the Philadelphia region unexpectedly contracted in September for a second month.

The Federal Reserve Bank of Philadelphia’s general economic index improved to minus 0.7 this month from minus 7.7 in August. Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. Economists forecast the measure would rise to 0.3, according to the median of 57 projections in a Bloomberg News survey. Estimates ranged from minus 7.2 to 5.

Another report showed that the number of Americans filing claims for unemployment insurance dropped to 450,000 last week, the lowest level in two months, data from the Labor Department showed.

In Switzerland, the government raised its forecast for economic growth this year after the economy expanded at a faster-than-expected pace in the second quarter.

Swiss gross domestic product will rise 2.7 percent instead of the 1.8 percent rate projected in June, the State Secretariat for Economic Affairs in Bern said in a statement today. In 2011, the economy may expand 1.2 percent instead of 1.6 percent.

Holcim, Swatch

Holcim declined 1.2 percent to 63.35 Swiss francs as construction shares were among the worst performers in Europe today. Vontobel AG, which has a “buy” rating on the world’s second-biggest cement maker, said in a note that “in the short term uncertainties remain high due to volatile price fluctuations and the lack of clear guidance given by the management.”

Swatch Group fell 0.8 percent to 350.20 francs. Kepler cut its recommendation on the maker of Omega and Breguet watches to “hold” from “buy” as the brokerage believes “its ability to surprise positively has declined.”

Cie. Financiere Richemont SA, the world’s largest jewelry maker, retreated 0.5 percent to 43.24 francs.

Transocean, ABB

Transocean, the owner of the oil rig that exploded in the Gulf of Mexico in April, surged 3.6 percent to 60.90 francs. The company may sell 5- and 10-year notes as soon as today, said the person, who declined to be identified because the company has yet to set terms. Transocean will use the proceeds to buy back convertible securities due in 2037, Vernier, Switzerland-based Transocean said today in a statement distributed by Marketwire.

ABB increased 1 percent to 20.79 francs. Goldman Sachs lifted its price estimate to 33 francs from 32 francs. The brokerage, which has a “buy” recommendation on the stock, said in a note that “ABB is the one company in our coverage with the broadest portfolio and exposure to the smart-grid opportunity and we believe it will be one of the major winners in this competitive landscape.”

Syngenta AG rose 1.7 percent to 255.70 francs. Sanford C. Bernstein & Co. initiated coverage of the world’s largest maker of agricultural chemicals with a “market perform” rating.

Credit Suisse Group AG gained 0.7 percent to 46.62 francs. European banks will be able to meet the Basel 3 minimum common equity requirement of 7 percent without raising capital, JPMorgan analysts wrote in a note. The brokerage said it prefers Swiss and French banks.

Julius Baer Group Ltd. lost 1.2 percent to 39.67 francs as the 120-year-old Swiss private bank was downgraded to “sell” from “reduce” at AlphaValue.

To contact the reporter on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net.

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