Stocks in Switzerland declined to their lowest level in more than three months amid concern the European debt crisis may worsen after Greek voters flocked to anti-bailout parties.
Roche Holding AG (ROG), the world’s largest maker of cancer drugs, slumped the most since November after the company halted a phase III trial of its dalcetrapib drug. Adecco SA (ADEN), the world’s biggest supplier of temporary workers, dropped to its lowest price this year as peer Michael Page International Plc said markets in Spain, Italy and the U.K. are “difficult.” Geberit Holding AG and Holcim Ltd. (HOLN) gained at least 1.8 percent, following a gauge of European construction companies higher.
The Swiss Market Index (SMI) slipped 0.3 percent to 6,040.18 at the close in Zurich. The measure fell 1 percent last week as Spain entered a recession and investors awaited the outcome of elections in France and Greece. The Swiss Performance Index retreated 0.1 percent today.
“Greece is probably going to be ungovernable,” said Christian Zogg, who manages about $540 million at LLB Asset Management in Vaduz, Liechtenstein. “If the budget cuts are withdrawn, with neither the left or right side feeling bound to the agreements of the previous government, Greece would be without financial support and would go bankrupt quite quickly. In France, a shift from consolidation to higher debt would have negative consequences for the euro.”
Voters in Greece and France challenged austerity as Europe’s only prescription for the financial crisis, adding pressure on German Chancellor Angela Merkel to broaden her focus from debt reduction to save the 17-nation bloc.
Greece’s political leaders struggled to find the support needed to form a coalition government after voters flocked to anti-bailout parties, calling into question the country’s ability to impose the measures needed to guarantee its future in the euro.
New Democracy led in the election, receiving 19 percent of the vote and 108 seats in the 300-seat Parliament. Syriza, a coalition of left parties which has vowed to cancel the bailout terms, got 17 percent to score 52 seats. Socialist Pasok, which partnered with New Democracy in securing a second rescue package for the country, trailed in third place with 41 seats.
Greece’s election results increases the risk of the country leaving the euro within the next year to 18 months to as high as 75 percent, Citigroup Inc. economists Guillaume Menuet and Juergen Michels wrote in a report today.
Under the terms of the 130 billion-euro ($169 billion) bailout from the European Union and International Monetary Fund, international lenders expect to hear in June how Greece will achieve 11.6 billion euros of savings for 2013 and 2014.
In France, 57-year-old Francois Hollande defeated President Nicolas Sarkozy to become the first Socialist in 17 years to control Europe’s second-biggest economy. He pledged to push for less austerity and more growth in the region.
“Austerity is not inevitable,” Hollande told supporters in Tulle, France, last night after he got about 52 percent against about 48 percent for Sarkozy.
Austerity measures aimed at stemming Europe’s turmoil have driven economies from the Netherlands to Spain back into recession, emboldening politicians campaigning for growth. The elections took place as 386 billion euros of emergency loan packages for Greece, Ireland and Portugal and a focus on deficit reduction failed to stem Europe’s sovereign-debt crisis.
Sarkozy’s departure may sharpen tensions with key allies as Hollande has advocated a more aggressive European Central Bank role in spurring growth, a measure opposed by Germany.
“Investors have been made aware again that there is no simple solution to the debt crisis,” Zogg said. “The two major European states could be governed by the left in the next couple of years, as we could see the same happening in Germany. That’s not exactly a rosy outlook for investors.”
Roche declined 3.5 percent to 159.40 Swiss francs, the biggest drop since Nov. 21, as the company stopped tests on its experimental dalcetrapib cholesterol treatment after an independent group of experts said the studies didn’t show clinically meaningful efficacy.
A gauge of health-care companies was the worst performer of the 19 industry groups in the Stoxx Europe 600 Index, with Nobel Biocare Holding AG (NOBN) falling 1.5 percent to 10.61 francs and Lonza Group AG (LONN), the world’s biggest maker of drug ingredients, slipping 1.1 percent to 41.96 francs.
Adecco dropped 1.8 percent to 39.25 francs, its lowest price this year, after peer Michael Page International Plc said it doesn’t expect a “fantastic” year, Finanz und Wirtschaft reported, citing an interview with Chief Executive Officer Steve Ingham. Markets in Spain, Italy and the U.K. are “difficult” and business with financial companies is “sluggish,” Ingham was quoted as saying.
Geberit, Europe’s biggest maker of toilet flushing systems, added 1.8 percent to 195 francs as a European construction companies were the best-performing group in the Stoxx 600. Holcim, the world’s second-largest cement maker, climbed 2.2 percent to 55.90 francs. Sika AG (SIK), Europe’s biggest maker of chemicals used in construction, rose 1.4 percent to 1,916 francs.
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