Swiss Stocks Fall, Trimming Best First Half Since 1998

Stocks in Switzerland declined, trimming the Swiss Market Index’s biggest first-half rally in 15 years, as investors awaited U.S. reports on business activity and consumer confidence.

Roche Holding AG (ROG) fell 1.8 percent after the largest three-day rally since August 2011. Watchmakers Swatch Group (UHR) AG and Cie. Financiere Richemont SA (CFR) increased at least 1 percent, extending this week’s gain to more than 5 percent.

The SMI dropped 0.4 percent to 7,639.74 at 11:57 a.m. in Zurich, paring its first weekly rally in six weeks. The gauge has gained 12 percent in the first half of 2013, the best start to a year since 1998, when it rallied 25 percent in the period period. It has slipped 3.8 percent in June and 2.2 percent this quarter as the Federal Reserve said it may trim stimulus measures as the U.S. economy heals. The broader Swiss Performance Index also lost 0.4 percent today.

“Investors will have to get used to the fact that cash infusions will not be available, at least not in the U.S.,” Philipp Baertschi, chief investment officer for private clients at Bank J. Safra Sarasin Ltd. in Zurich, wrote in a note. “This rehabilitation or process of adjustment will be accompanied by increased volatility in all asset classes. In the short term, we remain underweight bonds, equities as well as commodities.”

The VSMI Volatility Index, which gauges the cost of protecting against swings on the SMI, has jumped 54 percent this quarter, the biggest increase since September 2011. It rose 2 percent to 19 today.

U.S. Economy

In the U.S., the Thomson Reuters/University of Michigan final index of consumer sentiment rose to 83 in June, compared with a prior reading of 82.7 for the month, according to the median estimate of economists in a Bloomberg News survey before the report is released. The gauge would still be lower than the six-year high of 84.5 reached in May.

The MNI Chicago Report’s business barometer probably fell to 55 in June from 58.7 the previous month, according to a separate poll of economists. The gauge may remain above the 50 level that signals expansion.

An index that seeks to predict the Swiss economy’s direction about six months ahead advanced to 1.16 in June from a revised 1.09 last month, according to figures from the KOF Swiss Economic Institute in Zurich. That was less than the 1.19 median projection in a Bloomberg survey of economists.

Roche Retreats

Roche, which makes up about 17 percent of the SMI (SMI) by weight, slipped 1.8 percent to 231.50 Swiss francs as health-care stocks posted the biggest decline among the 19 industry groups on the Stoxx Europe 600 Index. The world’s biggest maker of cancer drugs is heading for its first decline in 13 months in June.

Schmolz & Bickenbach AG dropped 6.2 percent to 2.90 francs before trading was suspended at the company’s request. The maker of steel products offered shareholders seven new shares for every two they currently own in a 330 million-franc ($349 million) capital increase. The share sale must be approved at today’s annual general meeting, according to a a statement from the company.

Swatch increased 1.1 percent to 517 francs and Richemont climbed 1.3 percent to 84.15 francs, respectively.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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