Swiss stocks tumbled the most in almost four months amid concern the U.S. Federal Reserve will consider scaling back stimulus measures and as euro-area services and manufacturing contracted.
Credit Suisse Group AG led banks lower, falling the most in more than two weeks. Swatch Group AG and Cie. Financiere Richemont SA dropped more than 1 percent. Swiss Re Ltd. rose to a 4 1/2-year high as the world’s second-biggest reinsurer said it will return about $2.8 billion to shareholders after lower natural catastrophe claims.
The Swiss Market Index slid 1.6 percent to 7,505.71 at the close of trading in Zurich, retreating from the highest level since May 2008. The benchmark measure has still jumped 10 percent this year as U.S. lawmakers agreed on a compromise budget and the Swiss franc depreciated against the euro. The broader Swiss Performance Index fell 1.5 percent today.
“If they feel that they can step back from the stimulus it suggests that the economy is stronger than maybe they thought it was going to be,” Daniel Morris, a global strategist at JPMorgan Chase & Co. in London, said on Bloomberg Television with Francine Lacqua, referring to the Fed. “In the short term it might hurt the markets a bit because you’re losing a bit of that liquidity.”
The volume of shares changing hands in SMI-listed companies was 24 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
Fed officials continued to debate whether monetary easing risks fueling inflation or asset-price bubbles, minutes of the Jan. 29-30 policy meeting released after the close of European markets yesterday showed. Several participants “emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved,” according to the minutes.
Euro-area services and manufacturing shrank at a faster pace than economists forecast in February. A composite index based on a survey of purchasing managers fell to 47.3 from 48.6 in January, London-based Markit Economics said today. Economists had forecast a result of 49, according to the median of 22 estimates in a Bloomberg survey. A reading below 50 indicates contraction.
The Fed Bank of Philadelphia’s general economic index dropped to minus 12.5 this month, the lowest reading since June, from minus 5.8 in January. Readings lower than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The median forecast of 58 economists surveyed by Bloomberg projected an increase to 1.
U.S. jobless-benefit claims increased by 20,000 to 362,000 last week, exceeding forecasts, Labor Department data showed.
Credit Suisse, Switzerland’s second-largest bank, sank 4 percent to 26.24 francs, snapping a three-day rally. UBS AG declined 2.2 percent to 14.98 francs. A gauge of lenders was the second-worst performer among 19 industry groups in the Stoxx Europe 600 Index, sliding 2.5 percent.
Swatch, the largest maker of Swiss timepieces, fell 1.2 percent to 525.50 francs and Richemont, the owner of the Cartier brand, lost 2.7 percent to 74.55 francs, the biggest decline in two weeks.
Exports of Swiss watches rose 11 percent in January from a year earlier, while shipments to China sank 9.9 percent and those to the U.S. dropped 7 percent, according to the Federation of the Swiss Watch Industry.
Transocean Ltd., the world’s biggest offshore-rig contractor, retreated 4 percent to 49.10 francs, the lowest level since Jan. 10. West Texas Intermediate oil in New York fell to a six-week low as an industry report showed that U.S. crude supplies increased to the highest level since December.
Swiss Re gained 2.5 percent to 75.65 francs, the highest level since June 2008. Investors will receive a special dividend of 4 francs a share, plus an ordinary dividend of 3.50 francs. That exceeded the average estimate of eight analysts surveyed by Bloomberg for a total payout of 6.21 francs a share. Fourth-quarter net income was $795 million, exceeding the average analyst estimate of $240.3 million.