Swiss Stocks Little Changed as Novartis, Roche Drag SMI

Swiss stocks closed little changed, reversing earlier gains, as losses in drugmakers overshadowed optimism over an agreement between the U.S. and Russia to ease the threat of military strikes against Syria.

Novartis AG fell 1.5 percent, for the biggest drag on the benchmark gauge, as Barclays Plc cut its rating on the stock. Roche Holding AG, the second-biggest stock on the Swiss Market Index, retreated 0.5 percent. Swatch Group AG and Cie. Financiere Richemont SA advanced at least 1 percent.

The SMI fell 0.1 percent to 8,029.38 in Zurich, after earlier rising as much as 0.7 percent. Fourteen of the 20 shares in the gauge climbed, while six slid. The SMI has rallied 18 percent so far this year as central banks around the world pledged to leave interest rates low. The broader Swiss Performance Index increased less than 0.1 percent today.

“Russia has given the U.S. a way out,” said Max King, a strategist and portfolio manager at Investec Asset Management in London. “The decisive factor has been the public opinion in the U.K., U.S. and Europe and its opposition to entanglement in a ghastly civil war. However, we should not be complacent as the determination of some of the leaders to continue to do things such as, for example, arm al-Qaeda, is undiminished.”

The deal between Russia and the U.S., agreed on Sept. 14, paves the way for international monitoring of Syria’s chemical weapons. It calls for initial inspections in Syria by November. Western intelligence services blame Assad for a chemical attack on Aug. 21 that the U.S. says killed more than 1,400 people. Russia blames the rebels fighting Assad.

The volume of shares changing hands in companies listed on the SMI was 10 percent higher than the 30-day average, data compiled by Bloomberg showed.

Fed Chairman

In the U.S., former Treasury Secretary Lawrence Summers withdrew his nomination for chairman of the Federal Reserve before a two-day policy meeting starting tomorrow at which the central bank is forecast to announce a reduction in bond purchases. Summers would tighten Fed policy more than Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll of investors, analysts and traders last week.

Novartis, which makes up 19 percent of the SMI by weight, lost 1.5 percent to 69.90 Swiss francs, its biggest decline. Barclays downgraded the stock to underweight, the equivalent of sell, from equal weight, a rating similar to neutral.

The bank said the drugmaker may not achieve its growth target given the mixed sales trends in its recently introduced products. The shares trade at 14.7 times projected earnings, compared with a five-year average of 11.3 times, according to data compiled by Bloomberg.

Roche slipped 0.5 percent to 235.60 francs, reversing gains in the last two hours of trading for its longest losing streak this month.

Swatch added 1.1 percent to 574 francs and Richemont gained 1.6 percent to 93.10 francs.

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