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Market continues recovery

Blue chips have recovered ground after panic selling Keystone Archive

Swiss share prices made healthy gains on Monday, continuing a stock market recovery which began at the end of last week.

This content was published on July 29, 2002 - 18:15

The Swiss Market Index closed up almost five per cent at 5272,30 - its highest level in almost two weeks.

The SMI surge came after a turbulent week in the financial markets, which saw the blue chip index hit a five-year low on Wednesday before fighting back to end the week up 2.4 per cent at 5,024.

Monday's recovery was most marked among technical and financial stocks. The biotechnology company Serono, and the pharmaceuticals firm Roche both made strong gains, as did the insurers Swiss Life and Zurich Financial Services.

Analysts said financial firms were continuing to benefit from the Central Bank's unexpected half per cent interest rate cut on Friday, which would help cut their refinancing costs.

But they cautioned that although the stock market appeared to be following an upward trend, volatility was likely to continue amid ongoing concerns about the state of the global economy.

Couchepin upbeat

The Swiss economics minister, Pascal Couchepin, has spoken of his confidence in the future of the stock markets following last week's turbulence.

In an interview with the French-language newspaper "Le Temps", Couchepin said the latest drop in share prices was just part of the normal economic cycle.

"This market drop happened after many years of healthy trading, so it was foreseeable," he said. "It's just that the bubble has burst."

The economics minister said he was confident that the corporate scandals which have dogged the United States and precipitated the world market crash could not happen in Switzerland. "There is absolutely no evidence which would make me suspect Swiss companies of accounting malpractice," he said.

But Switzerland's main political parties were less sanguine about the stock market collapse and offered a variety of solutions. The Social Democrats on Monday presented an action plan for protecting small shareholders and strengthening supervision of the companies quoted on the stock exchange.

The Radicals called for tougher sanctions against companies submitting false accounts and the Christian Democrats and People's Party said they were considering similar measures.

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