Swiss Stocks Retreat for Fourth Day in Five; Swatch Shares Slide
Stocks in Switzerland declined for a fourth day in five after Moody’s Investors Service said the U.S. may lose its Aaa credit rating as lawmakers debate increasing the government’s debt limit.
Swatch Group AG, the world’s largest watch maker, slipped 1.7 percent. Credit Suisse Group AG (CSGN), Switzerland’s second- biggest bank, dropped 1.1 percent. Transocean Ltd. (RIG), the world’s largest offshore driller, fell 2.2 percent.
The SMI, a measure of the largest and most actively traded companies, retreated 0.7 percent to 5,980.97 at the 5:30 p.m. close in Zurich, its lowest level in more than a week. The gauge has tumbled 11 percent since its February high as U.S. manufacturing and job reports missed forecasts and concern grew that the European debt crisis is spreading. The broader Swiss Performance Index decreased 0.8 percent today.
“The U.S. has taken the place in the front row for markets,” said Dieter Buchholz, head of equities at Falcon Bank Ltd. in Zurich. “The employment situation has only improved a little and housing prices are suffering from foreclosures. A downgrade of the U.S. would be a short-term shock. Everybody knows the U.S. is not Aaa anymore, but the credibility of the government would vanish.”
Moody’s began its first U.S. review since 1996 as talks to raise the $14.3 trillion debt limit stalled, adding to concerns that political gridlock will lead to a default. Even a temporary default would likely have “large systemic effects” on the economy and Treasury finances by disrupting money funds, the repurchase-agreement market and foreign investor willingness to buy the government’s debt, according to JPMorgan Chase & Co.
Bernanke, Unemployment
Federal Reserve Chairman Ben S. Bernanke yesterday said the central bank is prepared to provide more stimulus if needed.
A report showed that the number of Americans filing initial unemployment claims dropped to the lowest level since April, a sign weakness in the labor market may be starting to abate. Applications for jobless benefits decreased 22,000 in the week ended July 9 to 405,000, Labor Department figures showed. Economists had forecast 415,000 claims, according to the median estimate in a Bloomberg News survey.
Swatch declined 1.7 percent to 424.70 Swiss francs after Credit Suisse analysts including Vincenzo Pescuma reduced their price estimate for the stock. Cie. Financiere Richemont SA retreated 1.4 percent to 54.65 francs.
Credit Suisse, UBS
Credit Suisse lost 1.1 percent to 30.59 francs after Dow Jones reported that Switzerland’s second-largest lender plans to cut 1,500 jobs, or 3 percent of its workforce.
UBS fell 0.9 percent to 13.91 francs. UBS plans to cut costs by 1 billion francs ($1.2 billion) a year, threatening some 5,000 jobs, Tages-Anzeiger reported today, citing unidentified “insiders.” The bank declined to comment on the report published today, calling it “speculation,” according to spokesman Andreas Kern in Zurich.
Transocean slid 2.2 percent to 49.21 francs as Barclays Plc advised selling the shares of Petrofac Ltd., a U.K.-based oilfield services and engineering provider. Weatherford International Ltd. (WFT), a Geneva-based oil rig owner, slid 3.5 percent to 15.06 francs, its largest drop in a month.
Swiss Life Holding AG (SLHN), Switzerland’s biggest life insurer, retreated 1.2 percent to 127.40 francs as CA Cheuvreux cut its 2011 earnings estimate for European insurers by 15 percent. Baloise Holding AG (BALN) lost 1.6 percent to 81.40 francs.
Holcim Ltd. (HOLN), the world’s second-biggest cement maker, dropped 2 percent to 57.75 francs as a gauge of European construction and materials companies was among the worst performers of the 19 industry groups in the Stoxx Europe 600 Index, sliding 1.6 percent.
Sika AG (SIK), Europe’s biggest maker of chemicals used in construction, slumped 3.9 percent to 1,835 francs, the company’s biggest retreat in more than 10 months.
To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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