Swiss Stocks Fall; Credit Suisse, UBS Pull Benchmark SMI Down in Zurich

Swiss stocks declined, dragging the benchmark Swiss Market Index lower for the first time in six days, as Credit Suisse Group AG and UBS AG dropped.

Credit Suisse and UBS fell at least 0.9 percent after the country’s financial regulator said Swiss banks may withdraw from some markets to counter the risks posed by cross-border clients. Julius Baer Group Ltd. rose 3.6 percent.

The SMI fell 0.5 percent to 6,477.13 at the 5:30 p.m. in Zurich, retreating from its highest close since June 21 trimming its weekly gain to 0.5 percent. The broader Swiss Performance Index slipped 0.4 percent.

“We’ve had a massive up trend over the past few weeks and we head into November with investors eager to hear about the FOMC, mid-term elections in the U.S, and the G20,” Neil Phillips, a fund manager at BlueBay Asset Management Plc in London, which oversees about $38 billion, said today. “Many will be taking risk off the table leading into this, but once this pause is over, I expect the trend to continue.”

Stocks declined even after a report showed German business confidence unexpectedly climbed in October to the highest level in three and a half years, suggesting growth may not slow as much as some economists forecast.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, rose to 107.6 from 106.8 in September. That’s the highest since May 2007. Economists had expected a drop to 106.5, according to the median of 38 forecasts in Bloomberg News survey.

G-20 finance ministers and central bankers began talks in Gyeongju, South Korea, today after weeks of wrangling over whether nations from the U.S. to China are relying on weaker exchange rates to spur growth.

Reduce Imbalances

Seeking a solution, U.S. Treasury Secretary Timothy F. Geithner proposed G-20 members pursue policies to reduce trade imbalances “below a specified share” of their economies, according to an Oct. 20 letter. That suggestion today split the group of emerging and industrial countries.

Federal Reserve Bank of St. Louis President James Bullard proposed that the U.S. central bank buy $100 billion in long- term Treasuries next month and calibrate subsequent purchases based on the course of economic recovery.

Good Program

“If we do decide to go ahead with quantitative easing, I think there is a good program we could adopt, one I like, which is to think in units of $100 billion between meetings” of the Federal Open Market Committee, Bullard said yesterday at a conference hosted by the district bank. “We could give forward guidance for the next meeting that would suggest how likely the committee thinks we would continue these purchases.” Credit Suisse slipped 1.2 percent to 40.9 francs, its third loss, while UBS fell 0.9 percent to 17.43 francs, erasing yesterday’s 0.5 percent gain.

“The legal and reputational risks associated with cross- border financial services have increased markedly in recent years,” the Financial Markets Regulatory Authority, or Finma, wrote today in a report. “They could threaten the continued existence of some institutions and have a destabilizing effect on the economy.”

Julius Baer, the 120-year-old Swiss private bank, climbed 3.6 percent to 39.01 francs, its second gain.

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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