Swiss Stocks Rally to Four-Year High; Novartis Gains

Swiss stocks climbed, with the Swiss Market Index closing at the highest level in more than four years, as German investor confidence exceeded forecasts.

Novartis AG (NOVN), which accounts for 19 percent of the SMI by weight, rose for a fourth day. AFG (AFGN) Arbonia-Forster Holding AG advanced 2.7 percent after saying it will reduce the size of its management team.

The SMI added 0.4 percent to 6,973.69 at the close of trading in Zurich, gaining for a fourth day in its longest winning streak in five weeks. The equity benchmark posted its highest close since Sept. 19, 2008, the week after the collapse of Lehman Brothers Holdings Inc. The broader Swiss Performance Index also increased 0.4 percent today.

“German ZEW data turned out to be much better than expected,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland. “As this index is highly correlated with short-term activity, it means that we can expect an improvement in economic activity in the first quarter of 2013.”

The SMI (SMI) has rallied 22 percent from this year’s low on June 4 as the European Central Bank unveiled an unlimited bond-buying plan. The volume of shares changing hands today in companies on the index was 24 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

Investor Confidence

In Germany, investor confidence jumped in December. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 6.9 from minus 15.7 in November. Economists had forecast a gain to minus 11.5, according to the median of 38 estimates in a Bloomberg News survey.

“After the setback in November, the economic expectations increased significantly and are in positive territory again for the first time since May,” Viola Julien, an analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in an e-mail. “Together with the robust assessment, it provides a positive indication for the German purchasing managers’ index.” The first reading of Germany’s PMI for this month is due on Dec. 14.

Fed rate setters began a two-day meeting today. The officials will consider whether to supplement $40 billion a month of mortgage-bond purchases with Treasury purchases. The central bank will publish updated projections on economic growth, unemployment and inflation tomorrow.

U.S. Budget

U.S. politicians need to agree on a budget to prevent more than $600 billion of automatic tax increases and spending cuts from coming into effect next year. President Barack Obama and Republican House Speaker John Boehner met at the weekend at the White House. Representatives for the two said in statements that “the lines of communication remain open.”

In Italy, Prime Minister Mario Monti said that his decision to resign and the elections due early next year will not lead to a political vacuum in the country.

Novartis rose 0.7 percent to 58.85 Swiss francs. The company told an American Society of Hematology meeting that its Jakavi drug reduced the burden of myelofibrosis in trials. It also said tests revealed its Tasigna drug has benefits compared with Glivec as a treatment for chronic myeloid leukemia.

“These two sets of results are important to Novartis in two ways,” Olav Zilian and Odile Rundquist, analysts at Helvea SA in Geneva, wrote in a report. “Tasigna is being positioned as the more efficacious follow-up compound to Glivec to protect this franchise. Jakavi, on the other hand, is a novel type of therapy for myelofibrosis where no efficacious therapy has been available before.”

Health-care companies contributed the most to the SMI’s advance, with Roche Holding AG (ROG), the world’s biggest maker of cancer drugs, rising 0.9 percent to 188.60 francs. Lonza Group AG (LONN) gained 1.4 percent to 48.52 francs and Sonova Holding AG (SOON) gained 0.9 percent to 106.90 francs.

AFG advanced 2.7 percent to 22.50 francs after the maker of heaters, windows, doors and refrigeration systems said it will reduce the size of its management and adapt its strategy to concentrate on construction materials.

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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