Swiss stocks fell as European Union officials struggled to break a deadlock on a second Greek rescue plan and a gauge of manufacturing in the New York area unexpectedly dropped.
UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s biggest banks, dropped at least 1 percent. Julius Baer Group Ltd. (BAER), the 121-year-old wealth manager, fell 1.9 percent. Carlo Gavazzi Holding AG (GAV), a Zug, Switzerland-based maker of electronic components, surged 14 percent after reporting increased earnings.
The Swiss Market Index (SMI) of the biggest and most actively traded companies slipped 0.9 percent to 6,198.17 at the 5:30 p.m. close in Zurich. The measure has fallen 7.7 percent from this year’s high on Feb. 18 as U.S. manufacturing and payroll reports fueled concern that the recovery in the world’s largest economy is faltering. The broader Swiss Performance Index (SPI) also lost 0.9 percent today.
“The Greek debt problem is on the agenda again, which is why we see the banking sector on the bottom end of the performance scale,” said Manfred Hofer, head of equity analysis at LGT Capital Management AG in Pfaeffikon, Switzerland. “The market is nervous as opinion in Europe is increasingly divided over the Greek debt dilemma.”
An emergency session of finance ministers in Brussels late yesterday failed to reconcile a German-led push for bondholders to bear some of the cost of a new Greek aid package with a European Central Bank warning that the move may constitute the euro area’s first sovereign default.
Merkel, Sarkozy Meet
German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet on June 17 in Berlin, with pressure mounting on the leaders to resolve their differences on a rescue for Greece, which was downgraded this week to the world’s lowest credit rating by Standard & Poor’s. Finance ministers agreed to convene again on June 19, a day earlier than planned. Talks may drag on into July, according to Luxembourg’s Finance Minister Luc Frieden.
Swiss stocks consolidated their losses after a report showed that manufacturing in the New York region unexpectedly shrank in June, a sign that factories continued to struggle following the disaster in Japan.
Another U.S. report today showed that consumer price inflation increased 0.2 percent in May, a faster rate than the 0.1 percent median forecast of economists surveyed by Bloomberg News. The so-called core measure, which excludes more volatile food and energy costs, climbed 0.3 percent, its biggest increase since July 2008. Industrial production in the U.S. rose 0.1 percent in May, less than the 0.2 percent forecast by economists in a Bloomberg survey, restrained by a slump in utility output and shortages of auto parts from Japan.
UBS, Julius Baer
UBS fell 1.6 percent to 15.20 Swiss francs and Credit Suisse dropped 1 percent to 34.17 francs as a gauge of European banks was the worst performer of the 19 industry groups in the Stoxx Europe 600 Index, dropping 2 percent. Julius Baer slipped 1.9 percent to 34.01 francs.
Zurich Financial Services AG, Switzerland’s biggest insurer, slid 1.5 percent to 218.90 francs. The company agreed to transfer the run-off business of its Zurich Specialties London Ltd. unit to Swiss Reinsurance Co. at book value as it sells assets to focus on its main markets. Swiss Re dropped 0.6 percent to 48.89 francs.
Charles Voegele Holding AG (VCH), a clothing retailer, slumped 16 percent to 50.55 francs after saying that the Swiss currency’s strength compared with the euro held back sales in the first five months of 2011.
Carlo Gavazzi surged 14 percent to 230 francs, its biggest gain in seven years, after saying annual net income almost tripled to 22.7 million francs ($27 million).
“The numbers are a clear surprise and a strong sign for Gavazzi,” wrote Michael Inauen, an analyst at Zuercher Kantonalbank in Zurich, in a note to clients.
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