Swiss stocks dropped, halting their longest winning streak in more than a month, as France and Spain held bond auctions amid surging borrowing costs.
UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, retreated at least 1.5 percent. Holcim Ltd., the world’s second-biggest cement maker, fell 2.4 percent as construction companies declined.
The Swiss Market Index, a measure of the largest and most actively traded companies, fell 0.7 percent to 5,644.62 at the close in Zurich. The benchmark measure had risen for the previous four days. The SMI has still rebounded 18 percent from this year’s low on Aug. 10 amid speculation that policy makers would act to resolve the euro area’s debt crisis. The Swiss Performance Index also lost 0.7 percent today.
“Volatility on the markets is enormously high,” Christian Schmidt, a technical analyst for equities at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in a report today. “The situation remains fragile as the interest in European government bonds seems to be decreasing. With declines in sales activity and as the market gradually seems to be drying up, various sale intentions are already enough to put massive pressure on prices.”
Spain sold 3.56 billion euros of a new benchmark 10-year bond, the Madrid-based Treasury said, at an average yield of 6.975 percent. Spain sold securities of a similar maturity at 5.433 percent on Oct. 20.
The extra yield on Spanish debt over German equivalents was 495 basis points, compared with 460 basis points yesterday.
France sold 6.98 billion euros of securities maturing between 2013 and 2016.
Italy’s Mario Monti
Italy’s new prime minister, Mario Monti, said his new government will first focus on implementing austerity measures passed by former Prime Minister Silvio Berlusconi’s administration that aimed to balance the budget in 2013. Then Monti will take additional steps that may include reinstating property taxes, overhauling the tax system, changing pension rules, trimming the size of the government and modifying labor laws.
Swiss stocks pared some of their losses after a U.S. report showed housing starts fell 0.3 percent in October to an annual rate of 628,000. The median estimate of economists surveyed by Bloomberg News called for a drop to 610,000.
Separately, a Labor Department release showed that fewer Americans than predicted filed claims for unemployment benefits last week, with applications decreasing 5,000 to 388,000, the lowest number since April.
UBS, Credit Suisse
UBS fell 2.9 percent to 10.49 Swiss francs as Chief Executive Officer Sergio Ermotti presented the lender’s new strategy at a meeting in New York today.
Credit Suisse declined 1.5 percent to 21.17 francs, its lowest price since September. The bank will close its fixed-income operations in Taiwan, according to two people with knowledge of the matter.
European banks dropped today after Fitch Ratings said American lenders face a “serious risk” that their creditworthiness will deteriorate if the euro area’s debt crisis deepens and spreads beyond the five most-troubled nations.
“The contagion risk is big,” said Peter Buergler, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “If the Europeans get the crisis under control, it will not necessarily lead to contagion, but rather that we will be feeling poorly over the next few years. More fees, more taxes, less welfare state. We will have to expect that.”
Holcim, Geberit Drop
Holcim fell 2.4 percent to 50.20 francs and Geberit AG, Europe’s biggest maker of toilet-flushing systems, lost 1.4 percent to 177.50 francs as a gauge of European construction companies was among the worst performers of the 19 industry groups in the Stoxx Europe 600 Index.
Swatch Group AG, the world’s biggest watchmaker, slipped 1.5 percent to 355.70 francs, while Cie. Financiere Richemont SA, the owner of the Cartier brand, decreased 1.7 percent to 48.12 francs.
Newron Pharmaceuticals SpA surged 15 percent to 2.45 francs after saying it has “received unsolicited approaches from a number of pharmaceutical and biopharmaceutical companies” regarding its safinamide compound.
-- With assistance from Julie Cruz in Frankfurt. Editors: Will Hadfield, Srinivasan Sivabalan