Swiss stocks fell the most in 12 weeks, led by a selloff in Swatch Group AG and Cie. Financiere Richemont SA, amid a report that China is curbing luxury-goods advertisements.
Swatch Group AG, the largest maker of Swiss watches and Cie. Financiere Richemont SA, the owner of the Cartier brand, declined at least 2.5 percent. Credit Suisse Group AG dropped 3.1 percent after reporting earnings. Zurich Insurance Group AG lost 1.7 percent as Citigroup Inc. downgraded the shares.
The SMI retreated 1.3 percent to 7,337.05 at the close in Zurich, the biggest drop since Nov. 15. The gauge has slipped 1.1 percent so far this week amid signs of political uncertainty in Spain and Italy, trimming the 2013 advance to 7.5 percent. The broader Swiss Performance Index slid 1.2 percent today.
“This year we have had an early rally on the hopes of a new dawn and recovery in the second half can help the economies rebound globally,” Nick Xanders, an equity strategist at BTIG Ltd. in London. wrote in a report to clients. “But there are plenty of mines ahead, including the Italian elections.”
Former Italian Prime Minister Silvio Berlusconi, who has pledged to roll back the nation’s austerity measures, has gained in popularity as the Feb. 24-25 elections approach. Berlusconi narrowed the lead of Pier Luigi Bersani, the front-runner, to within the margin of error of an opinion poll published yesterday.
Swatch Group slipped 2.9 percent to 518 Swiss francs and Richemont lost 2.8 percent to 73.75 francs.
Luxury stocks declined in Hong Kong after China’s Xinhua news service reported that the country’s media regulator had ordered radio and television channels to cut advertisements suggesting “gift giving.”
Some ads have encouraged people to give gifts including luxury watches and gold coins, the State Administration of Radio, Film and Television said in a circular, Xinhua reported. The move is a response to authorities’ call for people to avoid extravagance and waste, a spokesman for the administration said.
Credit Suisse slid 84 centimes to 26.16 francs. The shares rallied as much as 3.2 percent earlier after Switzerland’s second-biggest swung to a profit in the fourth quarter and raised its cost reductions for a third-time in seven months.
Chief Executive Officer Brady Dougan said cost-cutting measures had placed the lender in a position to “thrive” regardless of market conditions. The lender, which combined its wealth management, corporate and institutional clients and asset management units, reported a 71 percent increase in pretax earnings for the new division.
Zurich Insurance slid 4.40 francs to 254.50 francs after Citigroup downgraded the stock to neutral from buy, saying Zurich is now trading at a premium to its peers.
“We see limited sum-of-the-parts upside,” analysts including Farooq Hanif wrote in a report to clients dated yesterday. “Zurich has already done a lot of the heavy lifting on restructuring and we see less surprise potential from its initiatives than its peers.”
Basilea Pharmaceutica AG rose 0.9 percent to 50.85 francs as the drugmaker narrowed its 2012 operating loss to 50.8 million francs and announced that Chief Financial Officer of Joachim Blatter is leaving the company. Chief Executive Officer Ronald Scott declined to comment on a conference call that Basilea maybe the subject of a takeover.
Givaudan SA rallied 3.5 percent to 1,094 francs after analysts at both UBS AG and Liberum Capital Ltd. raised their recommendation for the world’s largest maker of flavorings and fragrances to “buy.” Earlier this week, the company reported a 63 percent jump in full year net income and announced plans to pay a dividend of 36 francs, topping analyst forecasts.
The volume of shares changing hands in SMI-listed companies was 6.8 percent more than the average of the last 30 days, data compiled by Bloomberg showed.