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Swiss Stocks Retreat as Moody’s Downgrades Spain; UBS Declines

Swiss stocks fell for the fourth day in five as Moody’s Investors Service’s downgrade of Spain added to concerns about European debt problems.

UBS AG (UBSN), Switzerland’s biggest bank, dropped for a second day as MF Global Holdings Ltd. downgraded the shares. Geberit AG (GEBN) slumped the most in almost a month after earnings missed analyst expectations.

The Swiss Market Index (SMI) of the biggest and most actively traded companies slid 0.7 percent to 6,404.62 at the 5:30 p.m. close in Zurich, erasing its gain for the year. The broader Swiss Performance Index (SPI) lost 0.8 percent.

“A peak in lead indicators, a sovereign crisis and a rising oil price have unnerved investors,” Karen Olney, a strategist at UBS in London, wrote in a note today.

Even after crude for April delivery tumbled the most in almost four months in New York today, prices are up 23 percent from a year ago.

Spain’s credit rating was cut to Aa2 by Moody’s, which said the cost of shoring up the banking industry will eclipse government estimates. The euro fell and Spanish bond yields climbed.

First-time claims for jobless benefits in the U.S. climbed last week from an almost three-year low, highlighting the uneven nature of the improvement in the labor market. Applications (INJCJC) for first-time unemployment benefits rose by 26,000 to 397,000 in the week ended March 5, Labor Department figures showed today.

Economic Growth

Shares dropped even after a report from BAK Basel Economics showed the Swiss economy may expand at a faster pace than previously projected this year as companies and consumers step up spending. Swiss gross domestic product may rise 2.4 percent this year instead of a previously projected 1.7 percent, the research institute said.

UBS tumbled 2 percent to 17.39 Swiss francs, the lowest in more than a month, as MF Global downgraded the stock to “sell” from “buy.”

Investment-banking earnings “appear vulnerable to a slowdown in equities underwriting and a limited seasonal uptick in trading volumes compared to previous years,” Simon Maughan, co-head of European equities at MF Global, wrote in a note to clients.

Geberit, the Jona, Switzerland-based maker of urinals, dropped 5.1 percent to 196 francs after reporting 2010 results. Net income rose to 406.8 million francs ($435.7 million), missing the average analyst estimate for profit of 414 million francs. The company plans a dividend of 6 francs.

A gauge of European insurers tumbled 2.1 percent today. Zurich Financial Services AG, Switzerland’s largest insurer, lost 1.4 percent to 261.30 francs. Swiss Re, the world’s second-biggest reinsurer, dropped 2.3 percent to 53.60 francs. CA Cheuvreux downgraded the stock to “underperform” from “outperform.”

Panalpina Welttransport Holding AG (PWTN) decreased 3.8 percent to 114.70 francs. Goldman Sachs Group Inc. cut the freight forwarder to “buy” from “conviction buy.”

To contact the reporter on this story: Giles Broom in Zurich at gbroom@bloomberg.net.

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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