Swiss stocks closed little changed as investors waited for progress in U.S. budget talks between President Barack Obama and Republican lawmakers to avoid automatic tax increases and spending cuts next year.
UBS (UBSN) slid after a person familiar with the matter said Switzerland’s largest bank may pay as much as $1.6 billion to settle claims of interest-rate manipulation. Alpiq Holding AG (ALPH) slipped 1.5 percent after saying it will incur a loss this year.
The Swiss Market Index (SMI) fell less than 0.1 percent to 6,897.1 in Zurich. The gauge has still gained 21 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 asset purchases. The broader Swiss Performance Index was also little changed today.
“The lack of agreement on the U.S. budget has created a negative sentiment feedback loop,” said Didier Duret, who helps manage 146 billion euros ($192 billion) as chief investment officer at ABN Amro Private Banking in Geneva. “It’s a pressure-cooker situation, similar to the one the European Union was facing earlier this year.”
U.S. politicians haven’t reached a budget deal with two weeks remaining to prevent the so-called fiscal cliff of more than $600 billion of automatic tax increases and spending cuts from coming into effect in January. The Congressional Budget Office has said a failure to avert those changes may lead to a recession in the first half of 2013.
UBS slid 0.5 percent to 14.97 Swiss francs. The fine that the lender will have to pay to settle claims of interest-rate manipulation may be as high as $1.6 billion, a person familiar with the investigations said. UBS would pay the fines to the U.S. Justice Department, the Commodity Futures Trading Commission, the U.K. Financial Services Authority and the Swiss Financial Market Supervisory Authority, the person said.
Alpiq slipped 1.5 percent to 130.20 francs as the utility said it expects losses this year after making adjustments of 1.40 billion francs ($1.53 billion) as part of its restructuring. Alpiq said it needs to make more “value adjustments” based on difficult market conditions and changes in the European energy market.
Valiant Holding AG (VATN) tumbled 7.9 percent to 88.10 francs, the biggest drop in more than two years. The company has decided to discontinue merger talks with Berner Kantonalbank, Valiant said in a statement late yesterday, saying legal evaluation has shown it couldn’t be implemented in a timely manner. The company also said Chairman Kurt Streit will step down on Jan. 1, 2013 and will be succeeded by Juerg Bucher.
Holcim Ltd. (HOLN) dropped 0.8 percent to 65.15 francs. The world’s largest cement-maker said it will take a charge of 410 million francs for write-offs of property, plant and equipment. The company was the second-worst performer on the Stoxx Europe 600 Construction and Materials Index.
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