Swiss stocks climbed, following their second-biggest weekly gain this year, as Italy formed a new government and optimism grew that the European Central Bank will lower its interest rate this week.
Swiss Life Holding AG and Zurich Insurance Group AG advanced, following a gauge of European insurers higher. Walter Meier AG increased 2.6 percent. Nobel Biocare Holding AG dropped as Kepler Capital Markets cut its recommendation for the world’s second-biggest maker of dental implants.
The Swiss Market Index rose 0.6 percent to 7,901.73 at the close of trading in Zurich. The equity benchmark has advanced 1.1 percent so far in April, its eighth consecutive monthly gain and its longest monthly winning streak in seven years. The SMI has rallied 16 percent this year. The broader Swiss Performance Index added 0.7 percent today.
“The end to the political deadlock in Italy is good news, and not only for markets,” Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland wrote in a message. “The political impasse was holding back investments and delayed the recovery for at least three months. Should any signs point to a broader recovery in Europe, markets will rise further. Valuations in Europe are still very undemanding.”
In Italy, the new Prime Minister Enrico Letta formed a government of politicians from his own Democratic Party, Silvio Berlusconi’s People of Liberty and supporters of ex-premier Mario Monti. Letta appointed Angelino Alfano as deputy prime minister and interior minister to win the votes of lawmakers from People of Liberty. The Democratic Party failed to win a majority of seats in the upper house of Italy’s parliament at elections in February, forcing it to build a coalition with its political opponents.
The European Central Bank will lower its interest rate at a meeting on May 2, according to the median estimate of economists in a Bloomberg survey. The Bank of England will keep its interest rate unchanged at a policy meeting next week, a separate survey of economists showed.
In the U.S., the Federal Reserve starts a two-day policy meeting tomorrow. A report last week showed that the world’s largest economy has grown more slowly than forecast.
Swiss Life, Switzerland’s largest life insurer, advanced 1.5 percent to 147.80 Swiss francs, as a gauge of European insurers climbed.
Zurich Insurance Group rose 0.8 percent to 258.50 francs. Finanz & Wirtschaft reported that the company plans to generate increased profit from organic growth and operational efficiencies, citing an interview with Chairman Josef Ackermann.
“Our message to shareholders is that they can expect a sustainable attractive dividend,” Ackermann added.
Walter Meier increased 2.6 percent to 55.55 francs after the company said that it will sell its wholesale air-conditioning unit in Germany.
“The extraordinary disposal gain will more than compensate for the disposed German wholesale business’s Ebit contribution in 2013,” Christian Arnold, an analyst at Vontobel Holding AG, wrote in a note to clients today. “We welcome this step as it simplifies Walter Meier’s business structure and will probably have a positive impact on divisional margin.”
Meyer Burger Technology AG rallied 16 percent to 5.89 francs. The supplier of machinery to solar-panel makers started a 151.7 million-franc ($162 million) capital increase today.
Nobel Biocare dropped 0.5 percent to 10.80 francs as Kepler downgraded its recommendation for the stock to reduce from hold, meaning investors should sell the shares. The brokerage cited the recent strong performance and said it remained cautious as “we don’t expect market growth recovery any time soon.”
The volume of shares changing hands in SMI-listed companies was 26 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.