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Swiss Stocks Decline; Novartis, Valiant Retreat as SGS Advances

Updated on

March 9 (Bloomberg) -- Swiss stocks fell as yields on Italian and Portuguese bonds climbed amid speculation that some of Europe’s most indebted countries won’t be able to repay debt.

Novartis AG, the Basel-based drugmaker, slipped 2 percent. Valiant Holding AG retreated 2.1 percent after reporting full-year profit that missed analysts’ estimates. SGS SA, the world’s largest inspection company, rallied 1.2 percent.

The Swiss Market Index of the biggest and most actively traded companies fell 1 percent to 6,446.6 at the 5:30 p.m. close in Zurich. The gauge has risen 50 percent since the start of the current bull market 2 years ago. The broader Swiss Performance Index lost 0.9 percent today to 5,855.85.

“Equity markets will remain fairly volatile as uncertainties rise,” said Franz Wenzel, chief investment strategist at AXA Investment Managers in Paris. “We remain confident that Portugal will ask for help.”

The Portuguese 10-year note yield increased to its highest since the euro was introduced in 1999.

Portugal wants to maintain access to the international capital markets, while it raises taxes and implements the deepest spending cuts in more than three decades. Policy makers aim to convince investors they can narrow the budget gap further and avoid a bailout after the Greek debt crisis led to a jump in yields for high-deficit euro nations.

The yield on Italian 10-year government bonds rose to 5 percent for the first time since November 2008.

Sovereign Ratings

Moritz Kraemer, managing director of European sovereign ratings at S&P, warned some countries may have their credit ratings cut further while a Greek debt default is a “possibility.”

Asked if the worst was over for the region’s sovereign credit-rating outlook, Kraemer said: “I wish I could say yes, but the answer is no.” Kraemer was speaking in an interview at a EuroMoney conference in London yesterday.

Brent crude rose on concern that turmoil in Libya may spread to other oil-producing nations in North Africa and the Middle East, disrupting supplies to Europe.

Brent for April delivery rose as much as 2.8 percent to $116.18 a barrel on London’s ICE Futures Europe exchange and traded at $115.53 at 4:51 p.m. local time.

Basel, Switzerland-based Novartis dropped 2 percent to 50.85 francs, a fourth straight day of declines for the longest falling streak this year.

Panalpina Welttransport Holding AG, the Swiss freight forwarder, dropped 3.5 percent to 119.20 francs. Sales of 7.2 billion francs missed estimates by more than 8 percent according to Bloomberg data.

Valiant Holding

Valiant Holding slid 2.1 percent to 128.20 francs. The bank said full-year net profit dropped 18 percent to 122.5 million francs. That’s less than the 139 million francs estimated by analysts surveyed by Bloomberg News. Valiant has tumbled 34 percent since Oct. 15.

SGS SA advanced 1.2 percent to 1,628 francs. The Geneva-based company started off “very well” this year, with “pleasing” growth in most divisions, Chief Executive Officer Chris Kirk told Finanz und Wirtschaft in an interview. For the full year, growth of a “high single-digit percentage” should be possible, the newspaper quoted Kirk as saying.

Charles Voegele Holding AG rallied 3.1 percent to 63.60 francs, its sixth gain. The shares have surged 15 percent this month. Credit Suisse raised its rating on the retailer to “outperform” from “neutral” after the company published earnings yesterday including a profit that trebled analysts’ estimates.

“The company’s restructuring measures have started to show their first positive effects,” Patrick Jnglin, analyst at the bank, wrote in a note to clients today. Vontobel AG, the Zurich-based brokerage, also recommended the shares.

Bossard Holding AG surged 5.3 percent to 150.50 francs as the Zug, Switzerland-based maker of industrial adhesives said full-year net income rose to 44.9 million francs versus 15.3 million francs in the prior year.

-- With assistance from Julie Cruz. Editor: Jason Carey

To contact the reporter on this story: Giles Broom in Zurich at gbroom@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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