Swiss Stocks Are Little Changed; Nestle Retreats

Swiss stocks were little changed, erasing earlier losses, as investors awaited the outcome of the Brussels summit of European Union leaders and reports presented a mixed picture of the U.S. economy.

Nestle SA (NESN), the heaviest share in the Swiss Market Index with a 24 percent weight, tumbled the most in almost six months after reporting revenue that missed analyst estimates. Swatch Group AG (UHR) and Cie. Financiere Richemont SA retreated at least 2 percent as data showed the country’s watch exports fell in September. Actelion (ATLN) Ltd. gained after reporting net income that beat forecasts.

The SMI (SMI) lost 0.1 percent to 6,781.72 at the close of trading in Zurich, after earlier declining as much as 0.7 percent. The benchmark measure has still rallied 19 percent from this year’s low on June 4 as European Central Bank policy makers agreed on an unlimited bond-buying plan and the Federal Reserve announced a third round of quantitative easing. The broader Swiss Performance Index fell less than 0.1 percent today.

“Expectations in general are very low and nobody expects that any kind of final deal will be struck” on either Spanish aid or integration of the region’s banking system at the summit, Markus Huber, head of German sales trading at ETX Capital in London, wrote in a note. “However, markets seem to have priced in at least some progress on both issues.”

Debating Points

Leaders gathered in Brussels this afternoon for the two-day discussions. Earlier, French President Francois Hollande said efforts to stem the debt crisis may unravel if member states fail to deliver on their promises. He called on the euro area to introduce a banking union, provide economic help to countries that reduce budget deficits, and show investors that Greece can stay in the single currency if it abides by its commitments.

Borrowing costs dropped at debt sales by Spain and France today. Spanish 10-year bonds advanced, pushing the yield to a six-month low, after the nation sold 4.61 billion euros of securities due in 2015, 2016 and 2022. France sold 7.97 billion euros of debt, with five-year notes attracting an average yield of 0.92 percent, down from 0.98 percent on Sept. 20. The country also auctioned two-, three- and four-year notes and inflation- linked securities maturing in 2021.

In the U.S., data showed More Americans than forecast filed applications for unemployment benefits last week. Jobless claims increased by 46,000 to 388,000 in the week ended Oct. 13 from a revised 342,000 the prior period, Labor Department figures showed. The median forecast of 49 economists surveyed by Bloomberg called for a rise to 365,000.

Leading Indicators

The index of U.S. leading economic indicators rose in September by the most in seven months, another report showed.

The Conference Board’s gauge of the outlook for the next three to six months increased 0.6 percent after a revised 0.4 percent drop in August that was bigger than initially reported, the New York-based group said. Economists in a Bloomberg survey projected the gauge would climb 0.2 percent.

China’s industrial production, retail sales and fixed-asset investment all accelerated in September. A separate release from the National Bureau of Statistics showed that gross domestic product expanded 7.4 percent in the third quarter from a year earlier. That matched the median estimate in a Bloomberg News survey and compared with 7.6 percent growth in the second quarter. GDP rose 2.2 percent from the previous period, a four- quarter high.

Nestle Falls

Nestle tumbled 1.7 percent to 61.20 francs, the sharpest decrease since April 23. The company reported slowing sales growth that missed analysts’ estimates in the first nine months of the year as demand stumbled in emerging markets and shipments of prepared dishes and cooking aids declined.

Revenue excluding acquisitions, divestments and currency swings gained 6.1 percent, the Vevey, Switzerland-based company said. The average estimate of 12 analysts surveyed by Bloomberg was for growth of 6.3 percent.

“Nestle delivers a weak last quarter,” Andreas von Arx, an analyst at Helvea AG in Zurich, wrote in a note. “We would expect consensus estimates to come down post results and would expect share-price pressure today.”

Swatch, the world’s largest watchmaker, slipped 2.4 percent to 386 francs. Richemont (CFR), the owner of the Cartier brand, tumbled 3.5 percent to 60.10 francs. Swiss watch exports declined 2.7 percent in September from a year earlier, according to a report from the Federation of the Swiss Watch Industry.

Actelion rose 0.6 percent to 46.83 francs. Switzerland’s largest biotechnology company reported third-quarter net income of 94.6 million Swiss francs ($102.5 million), exceeding the average 79.6 million-franc analyst estimate.

Credit Suisse Group AG (CSGN) and Transocean Ltd. led gains on the SMI, gaining 2.3 percent each to 22.60 francs and 44.30 francs, respectively.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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

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