Swiss Stocks Retreat, Led by ABB, UBS; Credit Suisse Declines

By Jakob Lindstroem

Dec. 19 (Bloomberg) -- Switzerland’s SMI index dropped for a third day, led by ABB Ltd. after the world’s biggest builder of electricity networks said fourth-quarter profit will be hurt by pretax provisions.

UBS AG, the country’s biggest lender, declined as it transferred $16.4 billion of mostly mortgage assets to the Swiss central bank’s rescue fund and Standard & Poor’s cut its rating. Credit Suisse Group AG retreated after Neue Zuercher Zeitung reported it plans to close three U.S. money market funds totaling $8 billion.

The Swiss Market Index of the largest and most actively traded companies lost 58.59, or 1.1 percent, to 5,456.46 at 1:35 p.m. in Zurich, extending the decline so far this week to 3.2 percent. The broader Swiss Performance Index decreased 40.26, or 0.9 percent, to 4,507.2 today.

ABB slumped 54 centimes, or 4.4 percent, to 15.3 Swiss francs. ABB will book provisions of $850 million for potential costs related to investigations into alleged anti-competitive practices in the U.S. and Europe. The company said it plans to reduce costs by $1 billion after new orders in October and November were hurt by the economic slowdown and lack of financing for its clients.

“That ABB is warning of a weakening order intake in all business areas in October and November is weighing on the stock,” said Hampus Engellau, an analyst at Svenska Handelsbanken AB in Stockholm. “ABB’s valuation has been falling recently.” He has an “accumulate” recommendation on ABB.

UBS, Credit Suisse

UBS decreased 52 centimes, or 3.6 percent, to 14.13 francs. Zurich-based UBS in October agreed to a government plan to split off as much as $60 billion of risky assets into the SNB fund.

S&P reduced its rating on UBS to A+ from AA- by S&P.

“The downgrades and revised outlooks reflect our view of the significant pressure on large complex financial institutions’ future performance due to increasing bank industry risk and the deepening global economic slowdown,” S&P said.

Credit Suisse lost 90 centimes, or 3 percent, to 29.3 francs. The funds, Prime Portfolio, Government Portfolio and Cash Reserve Fund, will be closed for new investments at the end of the month and liquidated early next year, Neue Zuercher Zeitung said, citing an unidentified spokeswoman.

Givaudan SA declined 36 francs, or 4.1 percent, to 836 francs. The world’s biggest flavors and fragrances maker had its shares added to Goldman Sachs Group Inc.’s “conviction sell” list.

“The company has a significantly more leveraged balance sheet than in previous economic downturns,” London-based analyst Richard Logan wrote in a note to clients. “The consumer spending downturn expected by our economists in the second half of next year is greater than any experienced by Givaudan before,” he said.

The following stocks also rose or fell in Swiss markets. Symbols are in parentheses.

AFG Arbonia-Forster Holding AG (AFG SW) sank 2.4 francs, or 2.1 percent, to 113.6. Helvea SA cut its share-price estimate for Switzerland’s largest home-appliance maker to 130 francs from 155.

“In the current difficult economic environment, AFG’s non- construction related divisions will be hit much harder as its main end-markets, the automotive and printing industries, are expected to see significantly lower volumes,” Zurich-based analyst Patrick Appenzeller wrote in a note.

Arpida Ltd. (ARPN SW) added 2 centimes, or 3.8 percent, to 55 centimes. The Swiss biotechnology company working on new treatments for skin infections said mid-stage studies of its Iclaprim treatment showed positive results.

Barry Callebaut AG (BARN SW) climbed 10.5 francs, or 1.6 percent, to 675 francs. The world’s biggest bulk-chocolate maker was given an “overweight” recommendation by JPMorgan Chase & Co. in new coverage.

“We expect earnings to accelerate” the coming two years, London-based analyst Pablo Zuanic wrote to investors.

Conzzeta Holding AG (CZH SW) declined 52 francs, or 3.1 percent, to 1,603. The Swiss maker of metal-cutting machinery forecast a “marked” decline in full-year profit after orders slumped.

Lindt & Spruengli AG (LISP SW) sank 51 francs, or 2.6 percent, to 1,889 francs, the fourth straight day of declines. Helvea initiated coverage of Switzerland’s oldest chocolate maker with a “reduce” recommendation. “Visibility into 2009 remains poor, and we believe that Lindt & Spruengli might not achieve its long-term sales growth target of 6 to 8 percent in 2009,” Zurich-based analyst Andreas von Arx wrote to clients.

To contact the reporter on this story: Jakob Lindstroem in Stockholm at jlindstroem@bloomberg.net.