Most Swiss stocks declined, snapping two days of gains, as leaders of the European Union met for a two-day summit.
Swatch Group AG dropped after a domestic watch group said it was concerned about the strength of the Swiss franc. UBS AG, Switzerland’s biggest bank, and Credit Suisse Group AG paced losses in financial shares. Syngenta AG led advancers.
The Swiss Market Index retreated 0.2 percent to 5,986.85 at the close of trade in Zurich after earlier falling as much as 0.7 percent. The benchmark gauge is heading for a 0.9 percent advance for the first half of the year. It has still dropped 5.6 percent since its 2012 high on March 16 as Spanish sovereign-bond yields surged and Greece held a second national election. The broader Swiss Performance Index also fell 0.2 percent today.
“Expectations for the summit are low as it looks set to be a more formal rehash of the current stalemate where Spain and Italy and other weaker nations plead for euro bonds and Germany’s Angela Merkel bluntly repeats her opposition,” Jonathan Sudaria, a dealer at Capital Spreads in London, wrote in a note to clients.
EU President Herman Van Rompuy, European Central Bank President Mario Draghi and European Commission President Jose Barroso have prepared a 10-year road map for the euro area, which they will discuss at today’s summit.
French President Francois Hollande, Italian Prime Minister Mario Monti and Spanish Premier Mariano Rajoy are pushing for quicker action to ease the sovereign-debt crisis. They back the creation of euro bonds and want to introduce measures that spur growth.
The Swiss government has said it’s looking at emergency initiatives such as negative rates and capital controls to weaken the domestic currency if the euro region’s turmoil escalates.
Swiss central bank Vice Chairman Jean-Pierre Danthine said negative interest rates are among the measures that could be used in a crisis situation.
“As you know, we don’t exclude any measure,” Danthine said at an event in Zurich today when asked about the possible use of negative rates. “This is a measure we could consider if the circumstances warrant it.”
Swatch, the biggest maker of Swiss watches, dropped 1.3 percent to 365.10 francs. Cie. Financiere Richemont SA, the second-largest luxury goods company, slid 1 percent to 50.50 francs.
The Federation of the Swiss Watch Industry said it is “very concerned” about the strength of the franc, which weighs on the producers’ margins and sales prices.
UBS lost 2.8 percent to 10.74 francs. Credit Suisse, the country’s second-largest lender, slid 3.3 percent to 16.58 francs. Julius Baer Group Ltd., the Swiss wealth manager established in 1890, dropped 1 percent to 33.40 francs.
A gauge of European banks fell 2.4 percent, for the biggest decline among the 19 industry groups in the Stoxx Europe 600 Index.
Syngenta, the world’s largest maker of crop chemicals, advanced 1.8 percent to 322 francs, for the biggest gain on the SMI.
Rieter Holding AG, a Swiss manufacturer of textile machinery, climbed 4.3 percent to 130.70 francs. UBS raised its recommendation on the stock to buy from neutral, citing the benefits of growth in Asia that may boost earnings starting in 2014.