Swiss stocks climbed the most in a month as signs the Federal Reserve will keep interest rates low outweighed an unexpected increase in U.S. initial jobless claims and a rise in Italy’s borrowing costs at a debt sale.
Holcim Ltd. gained 2.9 percent after Russian oligarch Filaret Galchev-Kaltsidis increased his stake in the world’s second-biggest cement maker. Roche Holding AG and Swatch Group AG advanced at least 1.5 percent.
The Swiss Market Index, a measure of Switzerland’s largest and most actively traded companies, rose 1.1 percent to 6,125.39 at the close in Zurich, the biggest jump since March 13. The gauge has retreated for the past three weeks as borrowing costs rose in Spain and the Federal Reserve indicated that it will hold off from making further asset purchases. The broader Swiss Performance Index also gained 1.1 percent today.
“Investors are currently trying to interpret the Fed’s message last night in a positive way, and on the other hand being attentive as Italy’s bond sale reminds them that we’re still in an environment where one needs to be cautious,” said John Plassard, director at Louis Capital Markets SA in Geneva.
The number of shares changing hands on the SMI today was 13 percent higher than the 30-day average, according to data compiled by Bloomberg.
Fed Vice Chairman Janet Yellen endorsed the view that borrowing costs will probably stay low through 2014 as the central bank misses its goal for full employment and inflation remains in check.
‘Modest to Moderate’
The Fed said the U.S. economy, the world’s biggest, maintained its expansion in all 12 of the central bank’s regions as manufacturing, hiring and retail sales showed signs of strength last month.
“The economy continued to expand at a modest to moderate pace from mid-February through late March,” the Fed said in its Beige Book business survey published late yesterday, two weeks before the Federal Open Market Committee meets to set monetary policy.
A U.S. Labor Department report showed that more Americans than forecast filed initial applications for jobless benefits last week, a sign the pace of improvement in the labor market is slowing. Claims rose to 380,000, the highest since Jan. 28, from a revised 367,000 the previous week. Economists predicted a drop to 355,000 in a Bloomberg survey. On April 6, a report showed U.S. employers added fewer workers than forecast.
Italy’s Debt Auction
Italy’s borrowing costs jumped at a sale of 4.88 billion euros ($6.4 billion) of bonds amid concern that Spain’s deficit woes have rekindled the region’s debt crisis. The Treasury sold the three-year notes at an average yield of 3.89 percent, the highest since January and up from 2.76 percent at the previous auction on March 14.
Investors bid for 1.43 times the amount offered, down from 1.56 times last month. The Treasury also sold 2 billion euros of bonds due in 2015, 2020 and 2023. The auction’s maximum target was 5 billion euros.
Holcim gained 2.9 percent to 57.60 Swiss francs. Filaret Galchev-Kaltsidis has invested 100 million francs ($109 million) in the cement maker, raising his stake to 10.8 percent from 10.1 percent, Handelszeitung reported, citing Thierry Sauvaire, who heads Galchev-Kaltsidis’s Zurich-based Eurocement Holding AG.
Roche climbed 1.6 percent to 156.70 francs. The world’s largest maker of cancer drugs said first-quarter sales declined 1 percent, hurt by pricing pressure in Europe and the strength of the Swiss franc.
Revenue dropped to 11 billion francs from 11.1 billion francs a year earlier, the Basel, Switzerland-based company said. Analysts had predicted 11.1 billion francs, the average of eight estimates compiled by Bloomberg. Roche doesn’t release quarterly earnings.
Roche indicated late yesterday that it is willing to raise a $51-a-share bid for Illumina Inc., calling its current offer a “more than reasonable starting point for negotiations” in a letter to Illumina’s shareholders.
Swatch rallied 3.1 percent to 427 francs, the most in more than a month. The world’s biggest watchmaker said it will acquire 100 percent of the shares of Simon Et Membrez SA in Delémont, Switzerland. The company’s CEO, Philippe Membrez, Etienne Membrez and Didier Membrez currently own the securities.
Swatch also said it will purchase a related 60 percent holding in Termiboîtes SA in Courtemaîche.
Sonova Holding AG advanced 1.6 percent to 101.10 francs as Morgan Stanley raised its price estimate for the hearing-aid maker by 38 percent to 106 francs.
Transocean Ltd. fell 1.4 percent to 45.08 francs. The world’s largest offshore drilling company asked a U.S. judge to block the U.S. Chemical Safety Board’s investigation of the fatal explosion of the Deepwater Horizon platform. Transocean claimed that the agency lacks authority to probe offshore rig disasters.