Swiss Stocks Rise for Biggest First-Half Rally Since 1998

Stocks in Switzerland increased for a fourth straight day, extending the benchmark Swiss Market Index’s biggest weekly rally in 18 months and its largest first-half advance in 15 years.

Novartis AG, which makes up almost a fifth of the SMI, gained 0.7 percent as U.S. regulators approved its Alzheimer’s patch treatment for all stages of the disease. Watchmaker Swatch Group AG rose 1.1 percent.

The SMI advanced 0.2 percent to 7,683.04 at the close in Zurich. The index has advanced 3.5 percent this week, the largest jump since December 2011. It has surged 13 percent in the first half of 2013, the best start to a year since 1998, when it rallied 26 percent in the period. The broader Swiss Performance Index added 0.1 percent today.

“People are substituting what were safe investments like gold with defensive global names in consumer staples and health-care stocks, which has contributed to a very strong performance of the Swiss market,” said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland. “Defensives have proved to be a safe place to hide when volatility increases.”

The SMI still slipped 3.3 percent in June and 1.7 percent this quarter as the Federal Reserve said it may trim stimulus measures as the U.S. economy heals.

The VSMI Volatility Index, which gauges the cost of protecting against swings on the SMI, has jumped 51 percent this quarter, the biggest increase since September 2011. It slipped 0.2 percent to 18.6 today.

The number of shares changing hands in SMI-listed companies was 5.2 percent less than the 30-day average today, according to data compiled by Bloomberg.

U.S. Economy

In the U.S., consumer sentiment fell less than forecast in June. The Thomson Reuters/University of Michigan said its final index of confidence eased to 84.1 this month from 84.5 at the end of May, which was the highest since July 2007. The median forecast in a Bloomberg survey of economists called for 83 in the gauge after a preliminary reading of 82.7.

A separate reported showed business activity in the U.S. cooled more than economist had projected for June. The MNI Chicago Report’s business barometer fell to 51.6 from 58.7 the previous month. A reading above 50 signals expansion. Economists had predicted a drop to 55 before the report, according to the median prediction.

An index that seeks to predict the Swiss economy’s direction about six months ahead advanced to 1.16 in June from a revised 1.09 last month, according to figures from the KOF Swiss Economic Institute in Zurich. That was less than the 1.19 median projection in a Bloomberg survey of economists.

Novartis Advances

Novartis, the second-heaviest stock on the SMI, gained 0.7 percent to 67.10 Swiss francs. The U.S. Food and Drug Administration expanded its approval for the drugmaker’s Exelon patch to patients at severe stages of Alzheimer’s disease.

Swatch added 1.1 percent to 517 francs. The shares have jumped 12 percent so far this year.

Schmolz & Bickenbach AG slumped 6.2 percent to 2.90 francs. The maker of steel products said shareholders approved a 331 million-franc ($350 million) rights offer today, which will allow investors to buy seven new shares for every two they currently own.

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