Swiss Stocks Drop From Five-Year High on Cyprus ConcernNamitha Jagadeesh
Swiss stocks declined from the highest level in five years amid concern an unprecedented levy on bank deposits in Cyprus will deepen the euro area’s sovereign-debt crisis.
UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, slid at least 2 percent. Mikron Holding AG shares jumped the most in more than two months after the company forecast improved profitability.
The Swiss Market Index fell 0.4 percent to 7,830.37 at the close in Zurich, paring an earlier drop of as much as 1.2 percent. The gauge last week climbed to the highest level since January 2008, as data pointed to a strengthening global economy and amid speculation that central banks will maintain economic support. The broader Swiss Performance Index also lost 0.4 percent today.
“Insecurity is back in the markets and it is a reminder that the euro crisis is not a topic you can put in a drawer,” said Alessandro Fezzi, senior market analyst at LGT Bank Schweiz AG in Zurich. “The levy, in particular, is a difficult thing as it might spread and increase insecurity in other countries, mainly in the periphery. For today’s trading session, it’s clearly negative, especially for financials.”
The number of shares changing hands in companies on the SMI was 6.8 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
Euro-area finance ministers reached an agreement on March 16, forcing bank depositors in Cyprus to share the cost of the latest euro-zone bailout. The plan reduced the cost of the rescue by 5.8 billion euros ($7.5 billion) to 10 billion euros.
While Cyprus accounts for less than half a percent of the currency bloc’s economy, the raid on bank accounts has fueled concern the precedent may re-ignite a financial crisis that began in 2009 in Greece.
Cypriot lawmakers will meet tomorrow to ratify the levy. The vote was delayed from today due to the need to examine changes to legislation, Speaker Yiannakis Omirou told reporters in Nicosia, in comments broadcast on state-run CYBC. The nation’s banks will remain shut through March 20 after a holiday today, a government official said.
UBS lost 2 percent to 15.19 Swiss francs and Credit Suisse retreated 2.4 percent to 26.24 francs, for the biggest declines in the SMI. A gauge of banks was the worst performer among 19 industry groups in the Stoxx Europe 600 Index.
Julius Baer Group Ltd., Switzerland’s third-largest wealth manager, declined 1.6 percent to 37.46 francs.
Mikron jumped 7.3 percent to 5.76 francs, the biggest gain since Jan. 9. The Swiss maker of machinery for fuel injectors and medical devices forecast an improvement in its 2013 earnings margin, based on a stronger order backlog for its automation unit.