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Swiss Stocks Decline Most Since August as Roche Retreats

Stocks in Switzerland dropped the most in more than a month as the U.S. government shutdown entered its second day.

Roche Holding AG (ROG), the world’s largest maker of cancer drugs, slid 1.6 percent, following a gauge of European health-care companies lower. Nestle SA (NESN), the world’s biggest food company, lost 1.4 percent. Acino Holding AG rallied 32 percent after agreeing to be bought by Avista Capital Partners and Nordic Capital for 398 million Swiss francs ($440 million).

The Swiss Market Index (SMI) declined 1.2 percent to 7,964.44 at the close of trading in Zurich. The measure advanced 3.6 percent in September, extending its gain last quarter to 4.4 percent, as the Federal Reserve refrained from reducing its monthly bond purchases. The gauge has rallied 17 percent so far in 2013. The broader Swiss Performance Index lost 1.1 percent today.

“Fear is increasing among investors that the situation in the U.S. won’t be solved in a timely manner,” said Joerg Lorenz, a senior fund manager who oversees about $560 million at Zuercher Kantonalbank AG in Zurich.

The volume of shares changing hands in SMI-listed companies was 3 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

The U.S. government began its first partial shutdown in 17 years yesterday as Republicans and Democrats failed to agree on a compromise budget to keep the federal government open into the new financial year. As many as 800,000 federal employees didn’t work and the government closed some services.

Shutdown Costs

A partial shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists in a Bloomberg survey, with the costs accelerating if the closure persists.

Day one of the shutdown wrapped up with no talks scheduled between the White House and Congress, making it more likely the standoff would merge with the fight over raising the U.S. debt limit later this month to make sure the government can pay all its bills.

The U.S. has begun final steps to avoid breaching its debt limit, Treasury Secretary Jacob J. Lew said, urging Congress to raise the borrowing authority “immediately” in a letter addressed to House Speaker John Boehner. Lew repeated that the measures will be exhausted no later than Oct. 17.

In Italy, Prime Minister Enrico Letta won a confidence vote today after Silvio Berlusconi backtracked on a pledge to bring down the five-month old government as his party showed signs of deserting him.

Berlusconi Threat

Berlusconi had repeatedly threatened to bring down the government if Letta’s Democratic Party voted to expel him from the Senate following his definitive conviction for tax fraud in August. A public hearing in a Senate committee on the matter is scheduled for Oct. 4.

European Central Bank policy makers meeting in Paris today kept the benchmark interest rate unchanged at a record low of 0.5 percent, in line with economists’ forecasts in a Bloomberg survey.

Roche fell 1.6 percent to 241.60 francs. Novartis AG and Actelion Ltd. declined 1.4 percent to 68.55 francs and 1.3 percent to 62.75 francs, respectively.

Nestle dropped 1.4 percent to 62.25 francs, contributing the most to the SMI’s slide, as Patrick Hasenboehler, an analyst at J. Safra Sarasin, reiterated his neutral rating on the shares after the company’s investor seminar.

“We have some doubts about the momentum and the valuation is not particularly attractive,” Hasenboehler wrote in a note to clients today.

Dufry Slides

Dufry AG, an operator of duty-free stores, decreased 2.2 percent to 135.20 francs. A gauge of European retailers posted the second-worst performance of the 19 industry groups in the Stoxx Europe 600 Index after Tesco Plc said first-half earnings declined, missing analysts’ estimates.

Acino (ACIN) surged 32 percent to 113.80 francs. Avista Capital Partners and Nordic Capital will offer shareholders 115 francs a share in cash in a tender offer, Acino said in a statement today. That’s 33 percent above yesterday’s closing price of 86.50 francs a share. Acino said its board unanimously supported the offer.

“We highly recommend to tender the shares,” Carla Baenziger, an analyst at Vontobel Holding AG, wrote in a report today. “The fact that the board supports the offer unanimously indicates that the price is certainly not too low.”

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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