Swiss Stocks Decline; Banks Slide Before Greek Vote, ABB Falls
Swiss stocks declined for the third time in four days as Greek Prime Minister George Papandreou’s decision to reshuffle his cabinet and seek a confidence vote increased speculation that Greece will default on its debt.
Credit Suisse Group AG (CSGN), Switzerland’s second-largest bank, dropped 0.6 percent. ABB Ltd. (ABBN), the world’s largest maker of power-transmission gear, slumped to its lowest price in almost three months.
The Swiss Market Index (SMI) of the biggest and most actively traded companies fell 0.7 percent to 6,157.67 at the 5:30 p.m. close in Zurich. The gauge has declined 4.3 percent this year as a slowdown in U.S. job creation suggested that the economic recovery is faltering and speculation grew that Greece may default on its debt. The broader Swiss Performance Index (SPI) lost 0.8 percent to 5,651.51.
“The bears are dominating the market,” said Michael Scholz, an equity strategist at WestLB AG in Dusseldorf. “Benchmark indexes are poised precariously close to lower support levels, meaning we may see further selling this week.”
Swiss stocks dropped as Greek protests about budget cuts fueled speculation that the Mediterranean nation will fail to carry out the austerity measures needed to qualify for further international aid. Greek police used tear gas as an estimated 8,000 people encircled Parliament House yesterday to protest against Papandreou’s additional wage cuts and tax increases.
German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet tomorrow in Berlin, as pressure increases for the two leaders to reach an accord on a rescue package for Greece.
UBS, Credit Suisse
Credit Suisse slipped 0.6 percent to 33.95 Swiss francs. Swiss National Bank Vice President Thomas Jordan said the lenders’ “exposure is very small” to Greece at a briefing in Bern today.
“However, should a domino effect from other countries spill over, that would pose a threat to the banking sector, for banks abroad and also for Switzerland’s banks,” Jordan added. “That’s why we think the build up of high-quality capital buffers is so important.”
ABB plunged 2.7 percent to 21.12 francs, its largest drop in three months, as the stock led industrial companies lower. ABB is the fifth-largest company by weighting in the SMI.
Charles Voegele Holding AG (VCH) sank 6.3 percent to 47.35 francs, its lowest price since October, after brokerages including Credit Suisse, Vontobel Holding AG and Kepler Capital Markets downgraded the shares. The clothing retailer extended its loss since this year’s high on April 20 to 32 percent.
To contact the reporter on this story: Giles Broom in Zurich at firstname.lastname@example.org.
To contact the editor responsible for this story: Andrew Rummer at email@example.com.