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May 16 (Bloomberg) -- Swiss stocks declined from their highest level since January 2008 as Zurich Insurance Group AG reported earnings that missed analysts’ estimates.

Zurich Insurance slid the most in more than a month after first-quarter net income dropped 7 percent. Novartis AG slipped 1.2 percent after a report that the drugmaker may bid for Actavis Inc. Cie. Financiere Richemont SA climbed the most in three weeks after increasing its dividend and posting full-year profit that exceeded analysts’ estimates.

The Swiss Market Index fell 0.7 percent to 8,256.15 at the close in Zurich, erasing an advance of as much as 0.4 percent. The equity benchmark climbed yesterday as Bank of England Governor Mervyn King raised his forecasts for economic growth in the U.K. The gauge is trading at 15.5 times estimated earnings, close to its highest valuation since 2009, according to data compiled by Bloomberg. The broader Swiss Performance Index slipped 0.6 percent today.

“Today’s drop is probably a reaction to yesterday’s rise,” said Christoph Riniker, head of strategy research at Bank Julius Baer & Co. in Zurich. “We always have to keep in mind that the market could become pricey, which could lead to a slowing in the coming weeks or months. Earnings have been mediocre. But there is a constructive environment for equities, so we believe that markets should go higher.”

The Standard & Poor’s 500 Index yesterday climbed to its ninth record in 10 days, as weak manufacturing data fueled speculation the Federal Reserve will not scale back stimulus.

U.S. Economy

A Commerce Department report today showed U.S. housing starts declined to an 853,000 annual rate in April from a revised 1.02 million pace in March. The median estimate of economists in a Bloomberg survey called for a 970,000 reading.

Zurich Insurance dropped 3.3 percent to 261.30 Swiss francs, the most since April 8, after Switzerland’s biggest insurer said first-quarter net income fell to $1.06 billion from $1.14 billion a year earlier. That missed the $1.14 billion average estimate of analysts surveyed by Bloomberg.

Novartis lost 1.2 percent to 72.20 francs as the Wall Street Journal reported that Europe’s biggest drugmaker is considering an offer for Actavis. The newspaper cited a person familiar with the matter. The U.S. generic-drug maker has already rejected approaches by Valeant Pharmaceuticals International Inc. and Mylan Inc. Novartis spokesman Eric Althoff said that the Basel-based company has no intention of bidding for Actavis.

Nestle SA, which has a weighting of 21 percent on the SMI, declined 1.8 percent to 66.70 francs.

Richemont Rises

Richemont rallied 7.6 percent to 88.80 francs after increasing its dividend by 82 percent to 1 franc a share. The owner of the Cartier brand said full-year net income climbed 30 percent to 2.01 billion euros ($2.6 billion), surpassing the average analyst estimate of 1.96 billion euros.

The company, which also owns Alfred Dunhill, said in a statement that Chairman Johann Rupert will take a one-year sabbatical after the annual shareholder meeting in September.

Swatch Group AG, the biggest maker of Swiss watches, added 2.4 percent to 594 francs, rising for a fourth day.

To contact the reporter on this story: Namitha Jagadeesh in London at

To contact the editor responsible for this story: Andrew Rummer at

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