Swiss stocks fell as U.S. policy makers return to Washington in an attempt to find a solution to the fiscal cliff and as consumer confidence in the world’s largest economy dropped more than forecast in December.
Transocean Ltd., the world’s biggest offshore driller, declined 4 percent. UBS AG (UBSN) retreated 1.4 percent. Swissmetal Holding AG (SMET) plunged 25 percent. Clariant AG (CLN) rallied 3 percent after the Swiss chemical company said it’s selling units for 502 million Swiss francs ($550 million).
The Swiss Market Index (SMI) slipped 0.4 percent to 6,862.55 at the close of trading in Zurich, after the Swiss market was closed for the past three days for the Christmas holiday. The gauge has still rallied 16 percent this year as the European Central Bank unveiled a bond-buying program and the Federal Reserve announced a further round of asset purchases. The broader Swiss Performance Index lost 0.3 percent today.
“I think there is a growing realisation that we are not going to get a market friendly outcome on the fiscal cliff within the next few days,” said James Knightley, senior economist at ING Groep NV in London. “This suggests risk appetite could fade away quickly with the consumer confidence report really highlighting the threat to the economy.”
The volume of shares changing hands today in SMI-listed companies was 26 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
Senate Majority Leader Harry Reid said a resolution to the U.S. budget dispute before Jan. 1 appears unlikely because Republicans won’t cooperate.
“I don’t know time-wise how it can happen now,” Reid, a Nevada Democrat, said on the Senate floor today. He blamed House Speaker John Boehner and Senate Minority Leader Mitch McConnell, both Republicans.
President Barack Obama is pressing for lawmakers to craft an interim deal to avert more than $600 billion in tax increases and spending cuts, known as the fiscal cliff. Republican House leaders will hold a conference call with their rank-and-file members today to discuss the path forward, according to a leadership aide who asked for anonymity to discuss planning issues.
In a letter to Congress yesterday aimed at intensifying pressure on lawmakers to reach a deal, U.S. Treasury Secretary Timothy Geithner said the federal debt limit will be reached on Dec. 31 and his department will begin using “extraordinary measures” to finance $200 billion in deficits into early 2013.
House Speaker John Boehner last week scrapped a plan he offered to allow higher tax rates on annual income above $1 million, saying it didn’t have enough support among House Republicans. He sent House members home that night, and no votes are scheduled for the rest of the year.
A report today showed that confidence among U.S. consumers declined more than forecast in December as the budget debate in Washington soured Americans’ outlook for the economy.
The Conference Board’s index of sentiment fell to 65.1 from a revised 71.5 reading the prior month, figures from the New York-based private research group showed today. The gauge was projected to fall to 70, according to the Bloomberg survey median.
Transocean dropped 4 percent to 40.20 francs, retreating the most since May and posting the worst performance on the SMI.
UBS, Switzerland’s largest lender, lost 1.4 percent to 14.37 francs, contributing the most to the SMI’s decline.
Swissmetal plunged 25 percent to 1.23 francs, the biggest slump since June 29, after the company late yesterday said its asset sales yield a low single-digit million franc sum.
Clariant advanced 3 percent to 12.20 francs after saying that it sold three out of five businesses put up for disposal to U.S. buyout firm SK Capital Partners, beating a deadline it set for the end of 2013.
The specialty chemicals maker will get approximately 460 million francs in cash for selling the textile chemicals, paper specialties and emulsions businesses. The deal is expected to be completed by the end of the second quarter of 2013, it said.
“Positive surprise today -- earlier than expected divestment, better price, low probability of writedowns,” Patrick Rafaisz, an analyst at Vontobel Holding AG, wrote in a note to clients today. “Despite short-term economic headwinds, today’s level represents a clear buying opportunity from a risk- reward perspective.”
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