Swiss Stocks Decline for Second Day; Nestle, Transocean Retreat

Swiss stocks fell for a second day amid mounting concern that the global economy is slowing as Citigroup Inc. reduced its forecasts for expansion in the U.S. in 2011 and 2012.

Nestle SA (NESN), the world’s largest food company, declined 2.5 percent. Transocean Ltd. (RIG), the world’s biggest offshore driller, retreated 2.5 percent. Logitech International SA (LOGN), the world’s largest maker of computer mice, climbed 2 percent.

The Swiss Market Index (SMI) lost 2 percent to 5,093.75 at the 5:30 p.m. close in Zurich, its lowest weekly close since April 2009. The gauge has tumbled 23 percent from this year’s high on Feb. 18 amid concern that European leaders won’t contain the region’s sovereign-debt crisis and that the U.S. recovery will stall. The broader Swiss Performance Index decreased 1.8 percent today.

“The fear that the turbulence on the financial markets will affect the real economy is weighing on stocks,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “As we have the weekend ahead of us, investors are rather cautious.”

The U.S. economy, the world’s largest, may expand this year and next less than previously forecast because of potential “political paralysis” and fiscal-tightening steps, Citigroup wrote in a report dated yesterday. The brokerage cut its 2011 gross domestic product growth forecast to 1.6 percent from 1.7 percent and lowered its 2012 estimate to 2.1 percent from 2.7 percent, according to Steven Wieting and Shawn Snyder, analysts at Citigroup.

‘Unintended Consequences’

Federal Reserve Bank of Dallas President Richard Fisher said yesterday that the U.S. central bank’s pledge to keep the benchmark interest rate near zero through at least mid-2013 may lead to “unintended consequences” and hurt growth.

“Now you know that you can wait to borrow because rates are going to be locked in at very low levels for a two-year period,” the regional bank chief said yesterday in an interview with CNBC. “This might well further retard the recovery.”

The Fed has lent Switzerland’s central bank $200 million in a program aimed at easing credit strains in Europe, the New York Fed said today.

The so-called swap arrangement with the Swiss National Bank was outstanding for the week ending Aug. 17, according to a weekly report posted by the New York Fed on its website. It was the first time a bank has used the program since March, when the European Central Bank tapped $70 million.

Under the program, the Fed lends dollars to central banks in other countries. In turn, the foreign central bank lends to commercial banks.

Nestle, Aryzta, Transocean

Nestle declined 2.5 percent to 48.11 Swiss francs as a gauge of European food and beverage companies was among the worst performers of the 19 industry groups in the Stoxx Europe 600 Index. Aryzta AG (ARYN), a Swiss supplier of bakery products to restaurants, fell 0.8 percent to 35.70 francs.

Transocean decreased 2.5 percent to 41.18 francs and Weatherford International Ltd. (WFT), a Geneva-based oil-rig owner, slipped 4.5 percent to 12.21 francs.

Alpiq Holding AG (ALPH), a Swiss energy company, sank 6.9 percent to 209 francs after reporting first-half net income that dropped 47 percent to 155 million francs ($197 million). The company said the strong franc “weighed heavily” on exports and that it doesn’t expect to see a “significant recovery” in its profit drivers in the second half.

Logitech International climbed 2 percent to 7.04 francs after Chief Executive Officer Guerrino de Luca said he plans to increase sales from business customers excluding video conferences to as much as 25 percent from about 15 percent. De Luca intends to compensate for Logitech’s troubled personal- computer business, Financial Times Deutschland reported, citing an interview.

Temenos Group AG (TEMN), the banking-software maker, surged 5.4 percent to 14.55 francs after Hewlett-Packard Co. (HPQ) agreed to buy Autonomy Corp. for $10.3 billion.

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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