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Swiss Market Index Rallies to Eight-Month High, Led by Banks

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Jan. 12 (Bloomberg) -- Stocks in Switzerland advanced for a second day, pushing the benchmark Swiss Market Index to the highest level in eight months, as Portugal’s sale of government debt eased concern that the country may require a bailout.

UBS AG, the nation’s biggest bank, soared 4.3 percent and Julius Baer Group Ltd., the 120-year-old private lender, climbed 3.9 percent.

The SMI of the biggest and most actively traded companies rose 1.2 percent to 6,613.75 at the 5:30 p.m. close of trading in Zurich, the highest since April 30. The 20-share gauge slid 1.7 percent last year as the financial and pharmaceutical industries declined. The broader Swiss Performance Index also added 1.2 percent today.

“After today’s auction in Portugal I still think Europe can handle the debt situation,” said Roland Armbruster, an analyst at Basler Kantonalbank in Basel, Switzerland. “World economic growth is prospering and so are earnings and these are fundamental things for stock markets.”

Portugal’s borrowing costs fell at a sale of 10-year bonds, indicating investor concern the country would follow Greece and Ireland in seeking a bailout was easing.

Portugal sold 599 million euros ($778 million) of bonds due in 2020 at a yield of 6.716 percent, the country’s debt management agency said today. That compares with 6.806 percent at the previous auction on Nov. 10. The government also placed 650 million euros of bonds due in 2014 at a yield of 5.396 percent, up from 4.041 percent on Oct. 27.

Deficit-Cutting Measures

European Union Economic and Monetary Affairs Commissioner Olli Rehn praised Portugal and Spain for the deficit-cutting measures those countries are taking.

“Portugal is on the right path,” Rehn told reporters at an event in Brussels earlier today, calling the measures taken by the Portuguese government “very bold.”

Debt sales by Spain and Italy this week will also prove successful, boosting investor confidence, according to Societe Generale SA.

“Banks doubtless will be out in force at the auctions this week,” strategists Aro Razafindrakola and Ciaran O’Hagan wrote in an investor report yesterday. “With the auctions this week going well, sentiment can improve.”

Spain is expected to sell up to 3 billion euros of 5-year bonds tomorrow, according to Bloomberg data.

Banks Gain

A gauge of Swiss bank shares increased 3.6 percent today. UBS rallied 4.3 percent to 16.64 Swiss francs, the biggest gain since July. Credit Suisse Group AG, the country’s second-biggest lender, surged 3.8 percent to 42.40 francs, the highest since November. Julius Baer advanced 3.9 percent to 44.60 francs, reversing yesterday’s loss.

Swiss Reinsurance Co. Ltd., the world’s second-largest reinsurer, rose 2.6 percent to 54.10 francs. That’s the highest price since November 2008.

Barry Callebaut AG, the world’s largest maker of bulk chocolate, gained 4.8 percent to 773.5 francs after reporting first-quarter revenue rose 4.9 percent to 1.52 billion francs ($1.57 billion).

Sika AG, the biggest maker of chemicals for construction, which also reported earnings this week, climbed 6.5 percent to 2,180 francs after UBS raised its rating to “buy” from “neutral.”

Kaba Holding AG surged 4.9 percent to 405 francs. Riet Cadonau will replace Rudolf Weber as CEO of the provider of electronic security systems beginning in July, the company announced today.

To contact the reporter on this story: Giles Broom in Zurich at

To contact the editor responsible for this story: David Merritt at

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