Swiss stocks (SMI) climbed, halting two days of declines, as European Union leaders agreed to add 200 billion euros ($267 billion) to their crisis-fighting war chest and tighten anti-deficit rules.
The Swiss Market Index, a measure of the country’s largest and most actively traded companies, added 1 percent to 5,793.57 at the close in Zurich. The benchmark measure has rallied 21 percent since this year’s low on Aug. 10 on mounting optimism that policy makers will find a solution to the euro-region debt crisis. The broader Swiss Performance Index increased 0.9 percent today.
“The leaders have now defined the end point that they want to reach,” Thomas Mayer, chief economist at Deutsche Bank AG, said in an interview with Bloomberg Television. “The good news is that there’s change to the approach. In the past, the summits were mostly focusing on the the near-term problem. Now they have decided to move ahead.”
EU policy makers agreed to tighten budget rules for the 17 countries that use the euro. The leaders outlined a “fiscal compact” to prevent debt building up in future and brought forward the start of the planned 500 billion-euro European Stability Mechanism. They also dropped their demand that investors share the cost of bailouts.
The euro area’s national central banks will lend 150 billion euros to the International Monetary Fund’s general resources, while central banks from the non-euro members of the EU will contribute a further 50 billion euros.
“I think it is a clear step in the right direction,” said Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich. “But there is still some way to go in terms of both credibility of execution, as well as whether the ECB will get involved. And that has been the problem -- the market has learned not to trust the ‘still some way to go’ because quite often that has turned into ‘not going anywhere’ over the last 24 months.”
The leaders said they will set up the ESM in July 2012, a year ahead of schedule. The EU will reassess plans to cap the overall lending of the ESM and the temporary fund at 500 billion euros by March. Germany deflected a move to grant the ESM a banking license, which would have enabled it to multiply its capacity by borrowing from the ECB.
In the U.S., a report showed that confidence among U.S. consumers rose more than forecast in December to a six-month high. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 67.7 this month from 64.1 at the end of last month. The median estimate of 73 economists surveyed by Bloomberg News called for a reading of 65.8.
UBS and Credit Suisse, Switzerland’s largest lenders, increased 2.7 percent to 11.42 Swiss francs and 3.5 percent to 22.98 francs, respectively. Julius Baer Group Ltd. (BAER), the 121- year-old wealth manager, rose 1.9 percent to 34.80 francs.
Swiss Life, Switzerland’s biggest life insurer, gained 4.6 percent to 93.70 francs. Swiss Re Ltd., the world’s second- largest reinsurer, gained 1.8 percent to 49.46 francs and Zurich Financial Services AG (ZURN) added 2.2 percent to 209.50 francs.
Transocean Ltd. (RIG), the world’s largest provider of offshore oil rigs, dropped 2 percent to 39.14 francs.
Syngenta AG (SYNN), the world’s biggest producer of crop- protection chemicals, slid 1.4 percent to 263.50 francs.
Wheat futures in Paris extended declines after the U.S. Department of Agriculture raised its estimate of global stockpiles.
Bachem Holding AG (BANB) slumped 6.7 percent to 34.95 francs, its lowest price since at least June 1998, after the drug-ingredient maker cut its 2011 guidance for local-currency revenue growth to 6 percent to 8 percent from 10 percent.
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