The Swiss stock exchange retreated in panic on Friday as official data showed that Europe's economy was plunging into a recession.

The Swiss Market Index, which tracks leading blue-chip companies, closed at 5,675 points, down 3.71 per cent.

As markets across Europe posted the worst losses in more than five years, the Swiss exchange faced its biggest drop in history as it hovered close to 5,400 points several times throughout the day. Shares rallied in afternoon trading to regain significant ground though still in the red.

Banks were particularly affected. Julius Baer saw its shares fall 13 per cent to close at SFr36.50 ($31.3). That's a 61 per cent drop since the start of the year. UBS shares ended down 5.21 per cent at SFr15.64. Credit Suisse fell 5.29 per cent to close at SFr42.24 a share.

Telecoms giant Swisscom proved to be the winner of the day on Friday with shares that eked out a 1.6 per cent increase to close at SFr362.

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