Swiss stocks fell for a third day amid concern that U.S. lawmakers may fail to reach an agreement on budget cuts and as Spain replaced its government.
Drugmakers pushed the Swiss Market Index (SMI) lower, with Roche Holding AG (ROG) and Novartis AG (NOVN) sliding more than 1.5 percent. Transocean Ltd. (RIG), the world’s largest provider of offshore oil rigs, declined 6.3 percent. Swatch Group AG (UHR) and Cie. Financiere Richemont SA slumped more than 5 percent.
The SMI, a measure of the largest and most actively traded companies, fell 2.5 percent to 5,477.26 at the close in Zurich, the lowest level in almost seven weeks. The gauge has still rebounded 14 percent from this year’s low on Aug. 10 amid speculation that policy makers would act to resolve the euro area’s debt crisis. The Swiss Performance Index also dropped 2.5 percent today.
“The focus was so much on the debt crisis that investors forgot about the problems in the U.S.,” said John Plassard, director at Louis Capital Markets in Geneva. “The longer one waits to take action on debt reduction and measures to restore growth, the longer it takes for investors to return to the market.”
The U.S.’s deficit-cutting congressional supercommittee will probably announce that it failed to reach an agreement on federal budget savings, according to an e-mail from a Democratic aide. The aide, who wasn’t authorized to discuss internal matters publicly and requested anonymity, said it was highly unlikely the talks could be salvaged.
Today is the deadline for the Congressional Budget Office to receive a plan it can analyze before the committee’s Nov. 23 target date for reaching a deal. Standard & Poor’s downgraded the U.S. on Aug. 5 to AA+ from AAA.
“The U.S.’s rating could still be downgraded because nothing will really be done to reduce the debt before the elections in November 2012,” Plassard said. “If another rating agency downgrades the U.S., it means they are no longer the historic safe haven. It’s the general idea that there are no more safe havens to rely on anymore that makes investors nervous.”
In Spain, Mariano Rajoy won the biggest majority in a parliamentary election in almost 30 years and told Spaniards to brace for difficult times as the nation fights to avoid being overwhelmed by the sovereign-debt crisis.
Roche, the world’s largest maker of cancer drugs, slid 3.8 percent to 137.20 Swiss francs. The world’s biggest drugmakers saw returns on their investments in new products decline 29 percent from last year as more experimental drugs failed at late stages of development, according to a report by consulting firm Deloitte LLP.
Novartis, Switzerland’s No. 1 drugmaker, dropped 1.8 percent to 49.26 francs. Chief Executive Officer Joe Jimenez said he sees a further decline in economic conditions that will require decisions on cost reductions, Le Temps reported, citing an interview.
Transocean slumped 6.3 percent to 41.65 francs. The company will be banned from operating in Rio de Janeiro state after Chevron Corp. hired Transocean to drill an offshore oil well that has been leaking in Brazil’s Frade field for more than a week. Transocean will be fined as much as 50 million reais and may be ordered by a court to make damage payments.
Swatch, Richemont Slide
Swatch, the world’s largest watchmaker, dropped 5.1 percent to 333.30 francs, its biggest drop since Sept. 30. Richemont, the owner of the Cartier brand, lost 5.3 percent to 45.25 francs.
Clariant AG, the world’s largest maker of printing-ink chemicals, fell 4.6 percent to 8.07 francs. Givaudan SA, the largest global maker of flavors and fragrances, slipped 1.1 percent to 762.50 francs and Syngenta AG (SYNN), the No. 1 producer of crop-protection chemicals, lost 2.3 percent to 255.10 francs.
Julius Baer Group Ltd. (BAER), a Swiss wealth manager, slid 2.2 percent to 31 francs as Chief Executive Officer Boris Collardi said Bank Sarasin & Cie. AG meets its acquisition criteria and a takeover would produce “synergies,” Le Temps reported, citing an interview.
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