Stocks in Switzerland Decline; Julius Baer Shares Retreat

Swiss stocks dropped to the lowest in almost two weeks as shares of banks and financial companies fell amid concern that political uncertainty in Spain and Italy may derail austerity programs.

Julius Baer Group Ltd. declined 3.1 percent after reporting a margin decline. Meyer Burger Technology AG tumbled to a one-month low as a report said the company will consider a capital increase. Swatch Group AG advanced 5 percent after 2012 profit beat forecasts.

The Swiss Market Index lost 0.8 percent to 7,362.72 at the close in Zurich, the lowest since Jan. 22. The benchmark gauge has still gained 7.9 percent so far this year as U.S. lawmakers agreed on a compromise budget and the Swiss franc weakened against the euro. The broader Swiss Performance Index retreated

0.7 percent today.

“We’ve become a bit cautious amid this rally as the market will need a breather,” said Markus Wallner, an equity strategist at Commerzbank AG in Frankfurt. “But we believe investors should further buy into the weakness.”

Spain’s 10-year yields climbed to the highest since Dec. 17 as Premier Mariano Rajoy denied corruption allegations and strategists from Commerzbank AG recommended reducing holdings of the nation’s debt.

In Italy, former premier Silvio Berlusconi closed the gap with the front-runner before elections this month as he promised taxpayers a cash rebate of 4 billion euros ($5.4 billion) if he is elected. Prime Minister Mario Monti accused Berlusconi of trying to buy votes.

Julius Baer

Julius Baer lost 1.17 francs to 36.39 francs after posting a margin decline. The third-largest Swiss wealth manager said its gross margin, or money generated from its 189 billion francs ($208 billion) of assets, fell to 94 basis points in the second half of last year from 104 basis points a year earlier as clients traded less. A basis point is one hundredth of a percentage point.

“At first look, results seem to be in line with our expectations,” Teresa Nielsen, an analyst at Vontobel Holding AG, wrote in a report. “However, taking out the large positive provisions, the cost base increased above our expectations. The gross margin is clearly under pressure as we expected.”

Credit Suisse Group AG, Switzerland’s second-biggest lender, lost 4.5 percent to 26.15 francs. That was the stock’s sharpest decline since June.

Meyer Burger dropped 6.5 percent to 7.80 francs. Chief Executive Officer Peter Pauli said the company must evaluate all financing options, including a capital increase, to get through the next 24 months, financial news website reported, citing an interview.

Swatch Advances

Swatch advanced 26 francs to 543.50 francs, for the largest gain on the SMI, as the world’s largest maker of Swiss watches reported a 26 percent increase in 2012 profit.

Net income rose to 1.6 billion francs. Analysts had forecast 1.49 billion francs, according to the average of 15 estimates compiled by Bloomberg. The watchmaker also said the outlook for 2013 continues to be “optimistic.”

“Swatch Group convinced with a strong performance in 2012,” Patrick Hasenboehler, an analyst at Bank Sarasin & Cie., wrote in a note to clients. “Today’s results will most likely lead to an increase of the consensus estimates also given the unchanged optimistic outlook statement by the company.”

The volume of shares changing hands in SMI-listed companies was 11 percent higher than the average of the last 30 days, data compiled by Bloomberg showed.