Stocks in Switzerland fell from their highest level in more than six weeks as a report showed German investor confidence unexpectedly declined.
Roche Holding AG, which constitutes 17 percent of the Swiss Market Index by weight, dropped the most in three weeks, contributing the most to the benchmark gauge’s drop. Holcim Ltd. slipped 2.5 percent as Exane BNP Paribas downgraded its rating on the cement maker. Swiss Re Ltd. fell 1.4 percent as RBC Capital Markets recommended investors sell the shares.
The SMI retreated 0.8 percent to 7,932.79 at the close in Zurich, its biggest decline since June 24. The measure advanced 2.6 percent last week as Federal Reserve Chairman Ben S. Bernanke said the U.S. economy still needs stimulus measures from the central bank. The broader Swiss Performance Index also declined 0.8 percent today.
“New dark clouds have started to black out growth prospects for the German economy,” Carsten Brzeski, a senior economist at ING Groep NV in Brussels, wrote in a report. “These clouds are not coming from the south but from the east. The stuttering and now slowing Chinese economy is a clear cause of concern.”
German investor confidence slipped in July after increasing in May and June. The ZEW Center for European Economic Research’s index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 36.3 this month from 38.5 in June. Economists surveyed by Bloomberg had predicted an increase to 40.
In the U.S., industrial production advanced 0.3 percent in June, in line with the median projection of economists surveyed by Bloomberg, data from the Federal Reserve showed. Output stagnated in May after dropping for the first time in six months in April.
In Switzerland, Novartis AG and Actelion Ltd. are among SMI-listed companies reporting results this week. The SMI is trading at 15 times projected earnings, compared to 15.7 times in May, which was the highest level since December 2009.
Roche, the world’s largest maker of cancer medicines, lost 1.9 percent to 237.50 Swiss francs.
Holcim declined 2.5 percent to 65.70 francs as Exane cut its recommendation on the stock to neutral from outperform, predicting weaker sales in emerging markets and continued pressure on gross margins in India.
Swiss Re slipped 1.4 percent to 72.10 francs as RBC Capital Markets downgraded its rating on the reinsurer to underperform, similar to a sell recommendation, from sector perform. The stock has still gained 9.4 percent this year.
Swiss Re is in preliminary talks about combining its Admin Re business with Phoenix Group Holdings. RBC said that Swiss Re may have to sell Admin Re at a 40 percent discount, leading to a $3.8 billion writedown on book value, while retaining the unit may lead to continued low return on equity.
The volume of shares changing hands in SMI-listed companies was 33 percent lower than the 30-day average today, according to data compiled by Bloomberg.