Swiss stocks retreated, snapping a three-day rally, as a solution to the sovereign-debt crisis continued to elude European Union leaders.
Chemical makers Clariant AG (CLN) and Givaudan SA (GIVN) led losses, slipping more than 3 percent, after analysts cut their recommendations. Actelion Ltd. (ATLN), Switzerland’s biggest biotechnology company, climbed 3 percent.
The Swiss Market Index (SMI), a measure of the biggest and most actively traded companies, dropped 0.2 percent to 5,551.65 at the 5:30 p.m. close in Zurich, after earlier rising as much as 1 percent. The gauge has tumbled 17 percent from its peak on Feb. 18 as disappointing European and U.S. economic reports added to concern that the global recovery is faltering. The broader Swiss Performance Index (SPI) sank 0.3 percent today.
“The markets are still insecure,” said Benno Galliker, a trader at Luzerner Kantonalbank in Lucerne, Switzerland. “The most pressing problem at the moment is Greece. As long as the EU doesn’t present a solution and continues to play for time, the markets will remain troubled. The markets want facts, and that is either a Greek default or a big restructuring.”
The SMI climbed to a two-month high yesterday amid speculation policy makers will increase efforts to contain the region’s sovereign-debt crisis.
The Financial Times reported late yesterday that as many as seven of the 17 nations using the euro believe private creditors should absorb bigger losses on their Greek bond holdings, a division that may threaten an agreement reached with private investors in July. The newspaper cited unnamed senior European officials.
Greek Parliamentary Backing
German Chancellor Angela Merkel signaled policy makers may review Greece’s second bailout after international debt inspectors rule on whether the country is meeting the terms of its current aid package.
Greece’s “numbers in September, as it now seems, were again different from what we expected under the program,” Merkel told Greek broadcaster NET when asked whether the second bailout agreed by European leaders on July 21 will be revised.
Greek Prime Minister George Papandreou won parliamentary backing late yesterday for a property tax to meet deficit-reduction targets required to avoid default.
‘Extend and Pretend’
Papandreou winning the parliamentary vote “is a step forward, but at the same time, the ultimate solution escapes everyone’s imagination,” said Steen Jakobsen, chief economist at Saxo Bank A/S, in an interview on Bloomberg Radio with Ken Prewitt. “I think we are dramatically in the final phase of what I call the ‘extend and pretend’ scenario. We are extending, buying time and we’re pretending there’s a credible solution to Greece, and that Greece is the only problem in Europe.”
Clariant, the world’s biggest maker of printing-ink chemicals, slumped 3.8 percent to 8.33 Swiss francs as JPMorgan Chase & Co. cut its recommendation on the company’s shares to “underweight” from “neutral.”
Givaudan, the world’s biggest producer of cosmetics chemicals, decreased 3.4 percent to 710 francs as Citigroup Inc. downgraded the stock to “sell” from “hold.”
Aryzta AG (ARYN), a Swiss supplier of bakery products to supermarkets and restaurants, dropped 2.5 percent to 39.55 francs. Patrik Schwendimann, an analyst at Zuercher Kantonalbank AG in Zurich, cut the shares to “market weight” from “overweight.”
Holcim Ltd. (HOLN), the world’s second-biggest cement maker, slumped 2.8 percent to 47.04 francs as a gauge of European construction companies was among the worst performers of the 19 industry groups in the Stoxx Europe 600 Index. Geberit AG (GEBN), Europe’s biggest maker of toilet flushing systems, lost 1.7 percent to 169.60 francs.
Actelion climbed 3 percent to 30.65 francs. The company’s board elected Jean-Pierre Garnier as chairman, replacing Robert Cawthorn, Actelion said in a statement after markets closed yesterday.
Schindler Holding AG (SCHP), a maker of escalators, rose 1 percent to 101.80 francs. The company said Juergen Tinggren will take over as chief executive officer on Oct. 1, replacing Alfred Schindler, who will remain chairman.
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