Swiss stocks increased, as gains by Credit Suisse Group AG and Synthes Inc. offset declines by Actelion Ltd. and Xstrata Plc.
Switzerland’s second-largest bank climbed 2.4 percent as BofA Merrill Lynch Global Research kept it as its top pick among European investment banks. Synthes advanced 1.1 percent as Credit Suisse retained an “outperform” rating on the stock. Actelion, the biggest Swiss biotechnology company, dropped 3.8 percent, ending a four-day winning streak.
The Swiss Market Index added 0.4 percent to 6,470.26 at the 5:30 p.m. close in Zurich. The gauge increased 1.3 percent last week as minutes from last month’s Federal Reserve meeting showed that U.S. officials were prepared to ease monetary policy further. The broader Swiss Performance Index also rose 0.4 percent today.
“After the recent strong rally, it is tempting to see the Fed’s upcoming quantitative-easing announcement as a potential bump in the road for stocks,” Ian Scott, a London-based strategist at Nomura Holdings Inc., wrote in a report to clients. “We cannot rule out a correction. However, with third- quarter earnings likely to surprise on the upside, valuations low and sentiment only modestly above ‘normal’, we continue to see upside potential.”
In the U.S., a report showed that production unexpectedly dropped in September for the first time since the recession ended in June 2009, showing the industry that led the economy out of the recession has cooled.
Output at factories, mines and utilities fell 0.2 percent, the first decline since the recession ended in June 2009, figures from the Federal Reserve showed today. Factory production also decreased 0.2 percent, as orders for consumer durable goods, including appliances and furniture, declined.
Credit Suisse increased 2.4 percent to 42.99 Swiss francs. BofA Merrill Lynch reiterated its preference for Switzerland’s second-biggest bank compared with other European investment banks. The brokerage said in a note that “long term, Credit Suisse can continue taking market share in wealth management and investment banking, while delivering a mid-twenties return on tangible book value and a 5 percent dividend yield.”
UBS AG, Switzerland’s biggest bank, increased 1.4 percent to 17.28 francs. Citigroup Inc., the bank 12 percent-owned by U.S. taxpayers, said profit surged, beating analysts’ estimates as the company cut its loan-loss reserves by $1.99 billion. Citigroup’s results provide “a good indicator that third- quarter results have the potential to beat current consensus estimates,” Hammer Partners said in an e-mailed comment about European investment banks.
Synthes rose 1.1 percent to 117.30 francs. Credit Suisse reiterated its “outperform” rating ahead of quarterly results, which are due on Oct. 21.
Nobel Biocare Gains
Nobel Biocare Holding AG climbed 4.5 percent to 17.84 euros after a Helvea AG analyst said that the Swiss dental implant maker “looks like a definite takeover target” at the current share price and raised his rating on the stock.
The Glattbrugg-based company is a “leading player in an attractive market with no major shareholders.” Low interest rates could spur interest from larger companies such as Johnson & Johnson, 3M Co. and Synthes, Daniel Jelovcan, the Helvea analyst, said today in a research note. He upgraded the stock to “buy” from “accumulate.”
Daetwyler Holding AG advanced 3.5 percent to 72.45 francs. The maker of packaging for drugmakers expects to report net income of 90 million francs ($94.1 million) and sales of 1.3 billion francs to 1.35 billion francs for 2010, Chief Executive Officer Paul Haelg told Finanz und Wirtschaft.
Roche Holding AG increased 1 percent to 143.30 francs. The drugmaker submitted applications in the U.S. and Europe to sell its Actemra/Roactemra medicine as a treatment for juvenile idiopathic arthritis, the company said today.
Actelion dropped 3.8 percent to 52.75 francs. The shares gained 14 percent in the four days ended Oct. 15. Exane BNP Paribas reiterated its “neutral” rating on the stock ahead of third-quarter results, which are due on Oct. 21.
Xstrata sank 2.2 percent to 19.80 francs, following European basic-resources shares lower. Separately, HSBC Holdings Plc cut its recommendation on the stock to “underweight” from “neutral.”
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