Swiss Stocks Drop; Actelion, Swatch Fall, Novartis Gains

Swiss stocks declined, snapping three days of gains, as the European Commission called for direct aid to troubled euro-area banks and the cost of insuring against a Spanish sovereign-debt default rose to a record.

SHL Telemedicine Ltd. (SHLTN) slid after reporting a first-quarter loss. Actelion Ltd. (ATLN) and Swatch Group AG also declined. Novartis AG (NOVN), Europe’s biggest drugmaker, gained.

The Swiss Market Index (SMI) slipped 0.2 percent to 5,902.82 at the close in Zurich. The Swiss equity benchmark has retreated 6.9 percent from this year’s high on March 16. The broader Swiss Performance Index dropped 0.4 percent today.

“What we are looking at now is a crisis of confidence and when you get a crisis of confidence, of course, equities suffer,” Peter Dixon, a global equities economist at Commerzbank AG in London, said in a Bloomberg Television interview today. “Spain is the big thing which everybody is concerned about at the moment and Spain is a problem of a much bigger order of magnitude than anything we’ve seen so far.”

The commission, the European Union’s executive arm, proposed that the euro’s permanent bailout fund inject cash to banks instead of channeling the money via national governments.

Credit-default swaps linked to Spain’s debt climbed 29 basis points to 589.5, according to data compiled by Bloomberg. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments climbed 7.8 basis points to 319.3. An increase signals worsening perceptions of credit quality.

Spain’s Bonds Slide

The country’s five-year notes extended their decline, driving the yield on the securities to more than 6 percent for the first time since Nov. 30.

Spanish bonds slid as the Financial Times reported that the European Central Bank had rejected the Spanish government’s plan for Bankia SA. The ECB denied it had blocked the plan.

“Contrary to media reports published today, the European Central Bank has not been consulted and has not expressed a position on plans by the Spanish authorities to recapitalize a major Spanish bank,” it said in a statement.

Switzerland’s KOF leading economic indicator unexpectedly increased in May, according to the Zurich-based institute.

In Greece, an opinion poll showed most people want the terms of the European Union-led international financial rescue eased, even as they acknowledge that failure to abide by the austerity measures may force the country to leave the single currency. Another poll showed the anti-austerity Syriza coalition in first place with 30 percent. Greece holds another general election on June 17.

Previously Owned Sales

In the U.S., a report showed that pending house sales slumped in April by the most in a year. The median forecast of 42 economists in a Bloomberg News survey had called for no change. Sales increased a revised 3.8 percent in March.

SHL Telemedicine sank 4.7 percent to 7.45 Swiss francs. The Israeli provider of heart-monitoring services that trades in Switzerland reported a first-quarter loss of $1.5 million.

Actelion, the country’s largest biotechnology company, slipped 2.8 percent to 37.63 francs.

Swatch Group AG (UHR), the world’s largest watchmaker, dropped 2.7 percent to 374.10 francs after a 5 percent jump yesterday.

Transocean Ltd., the world’s largest offshore-rig contractor, tumbled 4 percent to 40.44 francs.

Cie. Financiere Richemont SA, the owner of the Cartier brand, slid 2 percent to 56.60 francs.

Holcim Ltd. (HOLN), the world’s second-biggest cement maker, retreated 1.6 percent to 53.55 francs as construction shares fell on the Stoxx Europe 600 Index. (SXXP)

Novartis added 0.7 percent to 50.55 francs for the biggest contribution to the SMI’s advance. Credit Suisse Group AG (CSGN) said Europe’s largest drugmaker is unjustly undervalued.

The volume of shares changing hands in SMI-listed companies was 7.7 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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