By Twesha Dikshit
(Reuters) -European shares edged higher on Monday, recovering some ground after three straight sessions of declines, while Swiss stocks slumped to their lowest in more than three months as investors digested a hefty 39% U.S. tariff rate on Switzerland.
The pan-European STOXX 600 index rose 0.5% by 0830 GMT, after logging its biggest daily drop in more than three months on Friday. Switzerland’s benchmark SMI index fell 0.8% as trading resumed after a long weekend, with the top 10 decliners on the STOXX 600 being Swiss stocks.
Manufacturers in Switzerland, which counts the U.S. as the top export market for its pharmaceuticals, watches, machinery and chocolates, warned on Friday that tens of thousands of jobs were at risk after being hit with the heavy rate. The Swiss levy is much steeper than the baseline tariff of 15% faced by European Union, Japan and South Korea.
Swiss pharma stocks Novartis and Roche slipped 0.6% and 1.4%, respectively, after U.S. President Donald Trump sent letters to the leaders of 17 major pharmaceutical companies directing them to slash U.S. prescription drug prices.
Swiss luxury companies Richemont and Swatch, among the most exposed to tariffs, fell almost 1% each with Swatch Chief Executive Nick hayek calling on President Karin Keller-Sutter to meet Trump in Washington to negotiate a better deal.
“There was always this hope that 39% (tariff) is not going to stay, but it’s so difficult to tell. This is not the kind of diplomacy or the administration that we are used to,” said Ipek Ozkardeskaya, senior market analyst at Swissquote bank
“Each time Trump is not happy about something he’s just slapping tariffs so we’re really going through extremely unusual times.”
Meanwhile, banks were a bright spot on the day with shares in British lenders surging after the UK’s Supreme Court overturned a ruling on motor finance commissions, easing fears among banks about a redress scheme some analysts had warned could run into the tens of billions of pound.
Lloyds added 7.4% to the top of the STOXX 600 index, while Close Brothers surged 20% to the top of UK’s midcap index. Barclays, Bank of Ireland and Santander all gained over 2% each.
Among individual stocks, UBS slipped 1.4% after the bank said it would pay $300 million to resolve U.S. mortgage securities cases related to misselling of mortage-linked investments.
Weaker-than-expected U.S. jobs data for July and fresh tariffs on dozens of trading partners deepened concerns over the health of the U.S. economy, roiling Wall Street and European stocks on Friday.
(Reporting by Twesha Dikshit and Medha Singh; Editing by Subhranshu Sahu and Shinjini Ganguli)
