Swiss stocks declined, extending a six-week low for the Swiss Market Index, as the European Central Bank cut its forecast for euro-area economic growth this year, while President Mario Draghi said additional policy measures are being kept “on the shelf.”
Credit Suisse Group AG and UBS AG followed European peers lower. Zurich Insurance Group AG, Switzerland’s largest insurer, lost 1.9 percent. SGS SA, the world’s biggest product inspector, posted the best performance on the equity gauge.
The SMI slid 1.6 percent to 7,622.74 at the close of trading in Zurich, posting the biggest two-day drop since November 2011. The index retreated in the past two weeks as investors speculated that an improving U.S. economy will lead the Federal Reserve to pare stimulus measures. The broader Swiss Performance Index dropped 1.5 percent today.
“The mood is currently a bit more cautious,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities. “In the last few weeks good news was good news and bad news was good news. After the run-up we have seen in the market, many investors are looking for reasons to take profit.”
Draghi said the ECB cut its forecast for the 17-nation euro area’s economy to show contraction of 0.6 percent this year from an estimate of minus 0.5 percent made in March. Officials raised their projection for next year to 1.1 percent from 1 percent. The ECB cut its 2013 inflation forecast to 1.4 percent from 1.6 percent. The 2014 estimate was unchanged at 1.3 percent.
Draghi also said policy makers discussed additional stimulus policies and stand ready to act if needed.
“We had an ample discussion of the various measures, non-standard measures that could be utilized to repair the transmission policy,” Draghi told reporters in Frankfurt after the policy meeting today. “We see no reason to act on all these fronts. These are measures we keep on the shelf.”
The ECB earlier kept interest rates unchanged at a record low of 0.5 percent, in line with economists’ forecasts in a Bloomberg News survey.
Credit Suisse lost 3.8 percent to 26.51 Swiss francs, its biggest loss since Feb. 26. The lender may sell part of its wealth management business in Germany, according to three people with knowledge of the matter. The bank may focus on ultra-rich clients and sell the remainder to boost the profitability of the German business, said two of the people, who asked not to be identified because the deliberations are private.
UBS fell 1.8 percent to 16.39 francs and Zurich Insurance dropped 1.9 percent to 243.20 francs. Swiss Life Holding AG retreated 2.3 percent to 154.50 francs, while Baloise Holding AG lost 2 percent to 90.35 francs. Gauges of banks and insurers posted the biggest drops of the 19 industry groups in the Stoxx Europe 600 Index.
Syngenta AG, the world’s largest maker of crop chemicals, retreated 0.9 percent to 366.30 francs.
Transocean Ltd., the biggest supplier of offshore oil rigs, declined 2.4 percent to 46.81 francs.
SGS gained 0.9 percent to 2,132 francs, snapping two days of losses.