Swiss Stocks Drop the Most in 17 Months as Nestle Falls

Swiss stocks declined the most in almost 17 months as Nestle SA (NESN) dragged the benchmark Swiss Market Index lower.

Nestle contributed the most to the SMI (SMI)’s decline, while Adecco (ADEN) SA slid 3.9 percent after HSBC Holdings Plc and Goldman Sachs Group Inc. downgraded the shares. Cie. Financiere Richemont SA fell 4.1 percent. GAM Holding AG (GAM) tumbled 5.3 percent as the Swiss money manager reported a net outflow of assets in the first quarter.

The SMI lost 2.4 percent to 7,533.81 at the close of trading in Zurich, its biggest drop since Nov. 21, 2011. The equity benchmark has still rallied 10 percent in 2013 as U.S. lawmakers agreed on a compromise budget and reports fueled optimism that the world’s biggest economy is recovering. The broader Swiss Performance Index dropped 2.3 percent today.

“We are right now in a correction mode,” said Andreas Lipkow, a senior market strategist at Kliegel & Hafner AG in Berlin. “Market participants are a little bit worried about the economic situation, especially in the U.S. and in Asia. We’ve got some special things like the missile attack in Israel and also I heard the rumor of a possible downgrade of Germany.”

Two rockets struck the southern Israeli city of Eilat near Egypt’s Sinai peninsula. Israel’s military said the two rockets, which caused no injuries or damage, were fired from Sinai. Egypt denied the attack on the Red Sea resort town originated from its territory. A group called the Shura Council of al-Mujahidin in Jerusalem claimed responsibility.

The volume of shares changing hands in SMI-listed companies was 40 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

Beige Book

The Federal Reserve releases its Beige Book report at 2 p.m. in Washington. The survey analyzes economic conditions in 12 U.S. districts. Fed Chairman Ben S. Bernanke said on April 8 that “the economy is significantly stronger than it was four years ago, although conditions are clearly still far from where we would all like them to be.”

A report today showed Swiss investor confidence rose in April to its highest level since May 2010. An index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to 20 from 2.3 in March, the ZEW Center for European Economic Research in Mannheim, Germany, and Zurich-based Credit Suisse Group AG (CSGN) said.

Nestle fell 2.4 percent to 64.30 Swiss francs. The world’s biggest food producer accounts for 23 percent of the SMI.

Adecco, Richemont

Adecco slid 3.9 percent to 47.77 francs, its lowest price in four months. The world’s largest provider of temporary workers was cut to neutral from overweight at HSBC, which said growth at staffing companies is anaemic. Goldman Sachs downgraded the shares to sell from neutral. The brokerage said staffing markets in Europe, which account for over half of revenue, show no signs of improvement.

Richemont, the owner of the Cartier brand, slid 4.1 percent to 68.55 francs.

GAM Holding dropped 5.3 percent to 15.25 francs. The money manager said withdrawals by an institutional client and private-labeling partners of its Swiss & Global Asset Management unit resulted in the net outflow in the first quarter.

Julius Baer Group Ltd. (BAER), Switzerland’s third-biggest wealth manager, retreated 3.6 percent to 34.21 francs. UBS, Switzerland’s largest bank, lost 3.4 percent to 14.50 francs.

Sonova Holding AG (SOON) retreated 5.8 percent to 103.80 francs. The hearing-aid maker said it will reassess provisions for legal claims after a Kentucky court awarded a plaintiff $7.3 million for an implant covered by a voluntary recall in 2006.

Panalpina Welttransport Holding AG (PWTN) added 2.8 percent to 90.20 francs, halting three days of losses. The freight-forwarding company was raised to overweight from equal weight at Morgan Stanley, meaning that investors should hold more of the shares than are represented in benchmark indexes. Morgan Stanley said that investors have yet to price in the potential improvements introduced by the new management team.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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

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