The franc strengthened, snapping a three-day slump against the euro, as reports showing growth slowed across Europe last quarter drove investors to the perceived safety of the Swiss currency. The franc, a traditional refuge from financial turmoil, climbed versus all but one of its 16 major peers tracked by Bloomberg after German data showed Europe’s biggest economy almost stalled in the second quarter. The Swiss currency gained for the first time in five days against the dollar even as policy makers debate how to counter the franc’s strength. “On days when risk is off it will go up,” said Adam Cole, global head of currency strategy at Royal Bank of Canada in London. “That is something which hasn’t changed on the back of what is thus far just rhetoric” from the Swiss National Bank, he said. The franc strengthened 0.6 percent to 1.12589 per euro, as of 10:39 a.m. in London. The Swiss currency appreciated 0.3 percent to 78.18 centimes per dollar, after tumbling 8.1 percent during the past three days, the biggest decline since the euro was introduced in 1999. The euro weakened and the Stoxx Europe 600 Index fell after data from the Federal Statistics Office in Wiesbaden showed German gross domestic product, adjusted for seasonal effects, rose 0.1 percent from the first quarter. Economists had forecast growth of 0.5 percent, according to the median of 33 estimates in a Bloomberg News survey. Economic growth in the 17-nation euro area slowed to 0.2 percent in the second quarter, also worse than economists forecast and the least in two years. Lower Limit The Swiss central bank may introduce a currency peg with a lower limit of slightly above 1.10 against the euro before gradually increasing it, SonntagsZeitung reported on Aug. 14, citing people familiar with the situation. Policy makers are battling to curb gains which have seen the franc surge 14 percent this year against a basket of nine developed-market peers, according to Bloomberg Correlation-Weighted Currency Indexes. Swiss National Bank Vice President Thomas Jordan said they are assessing “a whole range of options,” according to an interview with Weltwoche published on Aug. 11. Gains in the franc are “unlikely to reverse quickly,” according to strategists at BNP Paribas SA. The bank is “sceptical” the SNB will peg it to the euro. “After suggestions that a plan of action might be adopted as early as tomorrow, euro-franc could collapse if the markets are disappointed,” strategists led by Ray Attrill, head of currency strategy in New York, wrote in an e-mailed note today. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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