Swiss stocks gained for the fourth day in five, led by financial and health-care shares, amid speculation European policy makers will intensify efforts to contain the region’s debt crisis.
UBS AG (UBSN), Switzerland’s biggest bank, added 5 percent after Oswald Gruebel resigned as chief executive officer in the wake of its $2.3 billion unauthorized trading losses. Sonova Holding AG (SOON), the hearing-aid maker, increased 4.1 percent as Credit Suisse Group AG (CSGN) upgraded the stock. Roche Holding AG (ROG), the world’s largest maker of cancer drugs, rallied 2.6 percent.
The Swiss Market Index (SMI) of the largest and most actively traded companies rose 1.9 percent to 5,401.01 at the 5:30 p.m. close in Zurich. The gauge has still declined 20 percent from this year’s high on Feb. 18 as the Swiss franc’s strength curbed exports and concern mounted that the global economic recovery is stalling. The broader Swiss Performance Index (SPI) advanced 1.8 percent today.
“Investors still seem to nourish hope that there will be a consensus amongst politicians,” said Christoph Riniker, head of strategy research at Julius Baer Group Ltd. (BAER) in Zurich. “However, it is probably still too early to speak of a solution. Although every now and again there is hope at the horizon, there are still a number of uncertainties, which weigh more on the markets than positive news. Therefore we have to assume that volatility will remain high in the short term.”
European policy makers face mounting pressure from foreign counterparts and investors to step up efforts to prevent their sovereign-debt crisis from further roiling the world’s financial markets and economy.
U.S. Treasury Secretary Timothy F. Geithner set the tone at the annual meeting of the International Monetary Fund in Washington by warning that failure to combat the Greek-led turmoil threatened “cascading default, bank runs and catastrophic risk.” Billionaire investor George Soros said “something needs to be done” to safeguard Europe’s banks because Greece may be unable to avoid default.
The IMF said it is ready to “strongly support” European nations in their efforts to resolve the debt crisis. Euro-area countries will do whatever is necessary to ensure the financial stability of the entire euro area and its members, the fund said in a statement on Sept. 24 after its meetings in Washington. Advanced nations are at the “core” of a resolution to the current global uncertainty and should adopt policies to improve their finances, it said.
German Chancellor Angela Merkel said euro-region leaders must build a firewall around Greece to avert a cascade of market attacks on other European countries that would risk breaking up the currency area. Expanding the powers of the region’s rescue fund as agreed by European leaders in July is necessary to avoid Greece’s problems from spilling over to other nations, Merkel said late yesterday on ARD television.
Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., predicted that advanced economies will stall in the next year as Europe slides into a recession.
There will be little or no economic growth in industrial nations in the coming 12 months as Europe’s economy shrinks 1 percent to 2 percent and the U.S. stagnates, El-Erian said. That will leave worldwide expansion at about 2.5 percent, less than the 4 percent forecast by the IMF this year and next.
“Fears of a recession are already priced in, to some extent,” Riniker said. “Overall, I think the current debt crisis stands more in the foreground than recession fears.”
UBS climbed 5 percent to 10.63 Swiss francs. Gruebel resigned after a $2.3 billion loss from unauthorized trading was announced less than two weeks ago. He was replaced on an interim basis by Sergio Ermotti, who joined six months ago as CEO for Europe the Middle East and Africa, UBS said on Sept. 24.
Credit Suisse jumped 5.6 percent to 22.47 francs and Julius Baer, the 121-year-old wealth manager, rose 3.6 percent to 29.11 francs.
Sonova gained 4.1 percent to 81.75 francs, its highest price since June 22. Credit Suisse analyst Christoph Gretler raised the company’s stock to “outperform” from “neutral,” saying that the hearing-device industry is “largely resilient to recession.”
Roche rallied 2.6 percent to 140.10 francs after a study showed its experimental vismodegib treatment helped patients with a form of skin cancer.
Novartis AG (NOVN), Europe’s second-biggest drugmaker by sales, gained 1.3 percent to 49.12 francs. Its kidney-cancer drug Afinitor also prevented breast cancer from worsening in a study that Novartis plans to use in applying for regulatory approval. The trial was stopped early because the primary goal was met faster than expected.
Aryzta AG (ARYN), a Swiss supplier of bakery products to supermarkets and restaurants, climbed 2.3 percent to 39.95 francs after reporting full-year underlying earnings per share rose 27 percent.
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