Stocks in Switzerland Decline as KOF Indicator Weakens

Swiss stocks declined for a second day, paring a monthly gain, as reports showed the country’s economy may weaken in the first half of the year and U.S. gross domestic product unexpectedly fell in the fourth-quarter.

Roche Holding AG lost 1.4 percent after posting 2012 earnings that missed analysts’ estimates. UBS AG slipped 2.5 percent after Exane BNP Paribas lowered its recommendation on Switzerland’s largest bank.

The SMI retreated 0.9 percent to 7,387.90 at the close in Zurich. The gauge has still advanced 8.3 percent since Jan. 1, for the biggest gain at the start of the year since the SMI came into being in 1988, as the Swiss franc weakened against the euro and U.S. lawmakers agreed on a compromise budget. The broader Swiss Performance Index also decreased 0.9 percent today.

“Switzerland’s stable growth and low inflation have been welcomed by investors, leading to a strong start to the year,” said Daniel Weston, chief investment officer at Aimed Capital Management LLC in Munich. “The weakness in the leading-indicator data has given investors a reason for profit taking, amid a bullish trend.”

Switzerland’s KOF economic indicator decreased for a fourth month in January, suggesting the economy may weaken in the first half of this year.

The monthly gauge, which aims to predict the economy’s direction about six months ahead, dropped to 1.05 from a revised 1.29 in December, the KOF Swiss Economic Institute in Zurich said. Economists forecast a retreat to 1.20, the median of 13 estimates in a Bloomberg News survey showed.

U.S. Economy

The U.S. economy unexpectedly contracted in the fourth-quarter, the worst performance since the second quarter of 2009. Gross domestic product dropped at a 0.1 percent annual rate, Commerce Department figures showed. Economists on average forecast growth at a 1.1 percent annual rate.

The volume of shares changing hands in SMI-listed companies was 3 percent higher than the average of the last 30 days, data compiled by Bloomberg showed.

Roche dropped 1.4 percent to 198.60 francs after the world’s biggest maker of cancer drugs reported full-year earnings excluding some items of 13.62 francs per share, missing the average analyst estimate of 13.67 according to a Bloomberg survey. Sales will rise this year at about the same pace as last year at constant exchange rates, Roche said in a statement.

Banks Drop

UBS slid 2.5 percent to 15.84 francs after Exane BNP Paribas lowered its recommendation on the shares to neutral from outperform, citing uncertainty about the future of its investment bank.

Credit Suisse Group AG slipped 1.4 percent to 26.72 francs.

Swatch Group AG, the world’s biggest maker of Swiss watches, retreated 1.9 percent to 492 francs.

Swatch’s Chinese retail partner, Hengdeli Holdings Ltd., fell in Hong Kong trading after Next magazine said it lost exclusive distribution license to sell brands including Omega, Rado and Longines. Swatch’s collaboration with Hengdeli hasn’t changed, the Swiss company’s chief executive officer, Nick Hayek, said in a telephone interview. He also forecast continued growth in the mainland Chinese market.

Before it's here, it's on the Bloomberg Terminal.