Swiss Stocks Little Changed; Swatch Rises, Banks Decline

Swiss stocks closed little changed as Swatch (UHR) Group AG’s results beat estimates, offsetting a bigger-than-expected contraction in German output and Moody’s Investors Service’s cut to the credit outlook of Europe’s largest economy.

Swatch rallied 2.3 percent as first-half profit surged 25 percent, helped by sales of Omega and Longines timepieces to Chinese consumers and by revenue at its component division. Cie. Financiere Richemont SA, the maker of Jaeger-LeCoultre watches, gained 1.2 percent. Credit Suisse Group AG (CSGN), Switzerland’s second-largest lender, dropped 1.3 percent.

The Swiss Market Index (SMI) lost 0.1 percent to 6,174.89 at the close of trading in Zurich. Ten of the gauge’s 20 members advanced, while ten declined. The benchmark measure has slipped 2.6 percent from its 2012 high on March 16 amid concern the euro area’s sovereign-debt crisis has hurt the economy. The SMI slumped the most since April 23 yesterday as concern mounted that Greece won’t fulfill its bailout commitments and Spanish borrowing costs rose to a euro-era high. The broader Swiss Performance Index was little changed today.

“It’s fair to say that the musings of credit agencies have lost some of their impact throughout the European crisis, as some believe them to be behind the curve,” said David Jones, chief market strategist at IG Index in London. “Markets have bigger things to worry about at the moment, with the prospect of further bailouts for Spain and the ever-present Greek problem. After yesterday’s volatility it may end up being a day of watching and waiting at these levels to see if any further proposed solutions are forthcoming -- or if indeed there are more shocks from the troubled European countries.”

Germany Outlook

Germany, the Netherlands and Luxembourg had the outlooks for their Aaa credit ratings lowered to negative by Moody’s, which cited “rising uncertainty” about Europe’s debt crisis.

Risks that Greece may leave the 17-nation euro currency and the “increasing likelihood” of collective support for European countries such as Spain and Italy were among reasons for the change, Moody’s also said yesterday in a statement.

Spain beat its maximum target at an auction even as its borrowing costs rose amid concern the nation may require a second bailout. The Treasury in Madrid today sold 3.05 billion euros ($3.69 billion) of bills, more than a target of 3 billion euros.

Spain’s benchmark 10-year note yield jumped to 7.565 percent yesterday, the highest since November 1996. The comparable rate in Italy climbed to 6.426 percent, a level unseen since Jan. 19.

Troika Meets

Officials from Greece’s troika of international creditors - - the European Commission, European Central Bank and International Monetary Fund -- arrive in Athens today amid doubts that the nation will meet commitments attached to bailout funding.

China’s manufacturing may contract at a slower pace in July after two interest-rate cuts and a rebound in lending spurred demand in the world’s second-largest economy, a private survey indicated.

The preliminary reading was 49.5 for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics. If confirmed, that would be the highest since February. In June, the final number was 48.2.

Swatch, the world’s largest watchmaker, jumped 2.3 percent to 369.90 Swiss francs. Net income rose to 720 million francs ($727 million) from 575 million francs a year earlier, the company said today. Operating profit rose to 903 million francs from 756 million francs, beating the 862 million-franc average estimate of four analysts surveyed by Bloomberg.

Richemont, the owner of the Cartier brand, gained 1.2 percent to 53 francs.

Credit Suisse

Credit Suisse dropped 1.3 percent to 16.20 francs, while Zurich Insurance Group AG slumped 1.6 percent to 209.70 francs. Banks and insurers were among the worst performing groups in the Stoxx Europe 600 Index.

Alpiq Holding AG (ALPH) declined 3.6 percent to 136 francs, its lowest price since January 2004, after saying that Hidroelectrica SA canceled long-term delivery contracts with a book value of about 80 million francs, which will have a negative impact on the energy company’s 2012 results.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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

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