Swiss markets hold firm in the face of US tariff onslaught

Aug 7 (Reuters) - Swiss blue-chip stocks rose in line with broader markets on Thursday, keeping above this week's nearly four-month lows, while the franc steadied even as a 39% tariff on U.S. imports of Swiss goods took effect.

Swiss President Karin Keller-Sutter left Washington empty-handed on Wednesday without meeting U.S. President Donald Trump or any of his top trade officials, with her proposal for a 10% tariff rate rejected, a source earlier told Reuters.

The Swiss blue-chip index .SSMI, which boasts major pharma companies, luxury watchmakers and large financial institutions among its constituents, was up 0.8% at 1045 GMT, compared with a 0.9% rise for the Europe-wide STOXX 600 .STOXX index. The index had hit its lowest since late April on Monday.

Some of the bad news on tariffs was already in the price, and Switzerland might still try to find a better solution, Torsten Sauter from Kepler Cheuvreux said.

"The companies that are listed in Switzerland, they have often a natural hedge or they have a unique product that they can raise prices on," he noted, adding as well that pharmaceutical exports were still excluded from the tariffs.

The Federal Council - the Swiss government - was due to hold an extraordinary meeting on Thursday afternoon.

A 39% rate threatens to inflict major damage on Switzerland's export-orientated economy by reducing access to its biggest overseas market for its watches, machinery and chocolate, economists have warned.

Ipek Ozkardeskaya, senior analyst at Swissquote, said there is hope that the negotiations will still take place.

"There is also hope in the markets that the tariffs on pharmaceuticals will have the same destiny as the tariffs on car producers, which means that they have been much less than the initial levels that have been announced," she said.

Shares in watchmakers such as Richemont CFR.S and Swatch UHR.S, which are down sharply for the year, were up 1.15% and 1.5% respectively, while food group Nestle NESN.S was up 1%.

Aside from the steep tariff rate, Swiss exporters face a double whammy of a stronger franc CHF=EBS and a disadvantage compared with companies in the European Union, Japan, or South Korea, which now all face a baseline tariff of 15% on imports to the U.S.

The franc firmed in European trading, leaving the dollar down 0.1% on the day at 0.80605 francs CHF=EBS.

"Effectively we thought that the Swiss franc was vulnerable to no agreement being made yesterday and indeed we got no agreement," said Michalis Rousakis, G10 FX Strategist at Bank Of America.

"The weakness we saw, plus implied volatility picking up on the back of it ... reflect those risks materialising."

The Swiss franc has weakened 0.3% against the dollar this week and fallen 1% against the euro.

Despite the drops, it is still around 11% higher versus the dollar so far this year, making it one of the best-performing major currencies against the greenback.

Stock markets in the U.S. and Europe are trading near record highs, despite an uncertain backdrop as Trump's tariffs come into effect and negotiations with major trading partners continue.