Swiss stocks advanced, for the biggest weekly rally in 18 months, as investors took assurance from Federal Reserve Chairman Ben S. Bernanke’s prediction that the U.S. economic recovery will continue in the long term.
Transocean Ltd. (RIG) jumped 4.7 percent after receiving regulatory approval to bid for Aker Drilling ASA. The nation’s watchmakers rallied, with Swatch Group AG (UHR) and Cie. Financiere Richemont SA rising more than 1 percent. Baloise Holding AG (BALN), Switzerland’s third-largest insurer, dropped 1.9 percent after Deutsche Bank AG downgraded the stock.
The Swiss Market Index (SMI) added 0.5 percent to 5,323.12 at the 5:30 p.m. close in Zurich. The SMI gained 4.5 percent this week, the biggest weekly rally since Feb. 2010. Even so, the gauge has tumbled 21 percent from this year’s high on Feb. 18 amid concern that the global economic recovery is stalling, while euro-area leaders struggled to contain the region’s sovereign-debt crisis. The broader Swiss Performance Index rose 0.4 percent today.
“The bulls are putting hope into a possible quantitative easing to be announced in September,” said Manish Singh, head of investment at Crossbridge Capital in London. “Is the Fed going to take measures to support the economy? Yes it will. But given the three dissents he had at the last meeting, he would rather discuss another round of quantitative easing and such measures at the next meeting in September before even hinting at it now.”
Bernanke sought to reassure investors and the public that U.S. growth is safe in the long run and that the Fed still has tools to aid the recovery if needed. Even so, he stopped short of indicating that the central bank will move ahead with a third round of government bond buying.
“In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus,” Bernanke said in a speech today to central bankers and economists gathered at their annual forum in Jackson Hole, Wyoming. He also said the bank has added a second day to its next policy meeting in September to “allow a fuller discussion” of the economy and the Fed’s possible response.
A Commerce Department report showed that U.S. gross domestic product grew at a 1 percent annual rate in the April to June quarter, down from the 1.3 percent pace estimated last month. That fell short of the 1.1 percent median forecast of 81 economists in a Bloomberg survey. The reduction reflected a smaller increase in inventories and fewer exports.
Traders yesterday sold German equity futures to hedge their investments before France, Italy and Spain extended curbs on short selling. Spain and Italy extended their bans through Sept. 30, regulators in both countries said in a statement. France’s Autorite des Marches Financiers said its ban may last until Nov. 11.
Swiss Economic Barometer
Switzerland’s economic barometer fell in August to its lowest level since November 2009. The monthly gauge that aims to predict the economy’s direction about six months ahead dropped to 1.61 from a revised 1.98 in July, the KOF Swiss Economic Institute in Zurich said today. Economists had projected that the gauge would decline to 1.8, the median of 14 estimates in a Bloomberg News survey showed.
Transocean surged 4.7 percent to 42.78 Swiss francs after Transocean Services AS, its wholly owned unit, received clearance from the Oslo Stock Exchange to launch an all cash voluntary offer for 100 percent of the shares of Aker Drilling for 26.50 kroner apiece.
Weatherford International Ltd. (WFT), a Geneva-based oil-rig owner, climbed 2.9 percent to 12.62 francs.
Swatch, Richemont Gain
Swatch, the world’s largest watch maker, rallied 2.1 percent to 347.50 francs and Richemont, the owner of the Cartier brand, rose 1.3 percent to 43.61 francs after Tiffany & Co., the world’s second-largest luxury jewelry retailer, reported profit that beat analysts’ estimates and raised its full-year earnings forecast.
Baloise Holding lost 1.9 percent to 68.40 francs after Spencer Horgan, an analyst at Deutsche Bank, cut the company’s shares to “sell” from “hold.”
Zurich Financial Services AG (ZURN) fell 1.6 percent to 169.40 francs, while Swiss Life Holding AG (SLHN) slipped 1.6 percent to 100.80 francs. Swiss Reinsurance Co., the world’s second-biggest reinsurer, sank 1.1 percent to 39.72 francs.
Clariant AG (CLN), the world’s largest maker of printing-ink chemicals, sank 1.4 percent to 8.51 francs as a gauge of European chemical companies was among the worst performers of the 19 industry groups in the Stoxx Europe 600 Index.
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