Stocks in Switzerland tumbled, led by the nation’s exporters, while the Euro Stoxx 50 Index rose, after the Swiss National Bank (SNBN) unexpectedly ended its minimum exchange rate.

The Swiss Market Index plummeted 8.7 percent at 2:14 p.m. in Zurich, for its biggest decline since 2008. The Euro Stoxx 50 advanced 1.2 percent. Italy’s FTSE MIB Index surged 1.8 percent for the biggest gain out of 18 western European benchmark indexes, while Germany’s DAX Index jumped 1.1 percent.

The SNB’s decision comes just one week before European Central Bank policy makers meet to discuss introducing new stimulus, including quantitative easing, a move that may add to pressure on the Swiss franc against the euro.

“It’s a big shock for Swiss companies as they have to deal with a significantly stronger currency now,” Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark, said by phone. “We feel confident that this move was meant to be ahead of the ECB’s QE announcement. Italian stocks are up, the DAX is up, so clearly investors are getting that we now have the policy environment for QE.”

Swiss exporters slid as the franc jumped to a record against the euro and surged as much as 27 percent versus the dollar. Watchmakers Cie. Financiere Richemont (CFR) and Swatch Group AG, which get the majority of their revenue from outside the nation, plunged at least 14 percent. Holcim Ltd., the world’s biggest cement maker, dropped 11 percent.

“Today’s SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country,” Swatch Chief Executive Officer Nick Hayek said by e-mail.

Swiss Banks

Swiss banks and financial companies also retreated. UBS Group AG sank 11 percent, while Credit Suisse Group AG slumped 12 percent. Julius Bear Group Ltd. slid 13 percent. Before today’s decision by the SNB, analysts at JPMorgan Chase & Co. said in a note that UBS, Switzerland’s largest bank, would be among lenders benefiting from an appreciating dollar.

The SNB gave up its minimum exchange rate of 1.20 francs per euro, ending a three-year-old policy designed to shield the economy from the euro area’s sovereign-debt crisis. The central bank also lowered the interest rate on sight deposit account balances that exceed a given exemption threshold to minus 0.75 percent from minus 0.25.

The rally in the franc briefly caused several benchmark indexes priced in euros to surge as Swiss companies reflected the currency jump. The Stoxx Europe 600 Index showed a gain of as much as 4 percent before paring the increase.

Among stocks rising today, Total SA led gains on the Euro Stoxx 50, climbing 2.8 percent, as energy companies rebounded. Consumer companies also advanced, with Unilever rising 2.9 percent and Anheuser-Busch InBev NV increasing 2 percent.

Associated British Foods Plc (ABF) added 2.3 percent after reporting a better-than-expected performance at its Primark U.K. budget-fashion chain.

Source: Bloomberg – Swiss Stocks Tumble, European Equities Rise After SNB

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