Euro-area stocks declined, retreating from a 17-month high, amid concern a budget deal will fail to reduce the U.S. government’s deficit, while Swiss shares rallied after the New Year holiday.

The U.S. House of Representatives passed the budget legislation on Jan. 1, breaking an impasse over how to prevent more than $600 billion in tax increases and spending cuts from coming into force. The agreement will delay by two months the automatic spending reductions. Republican lawmakers abandoned their efforts to add further reductions to the deal.

President Barack Obama signed the bill into law. Republicans are now planning to use the need to raise the $16.4 trillion debt ceiling to force Obama to accept cuts to entitlement programs such as Medicare.

K+S AG  retreated 2.3 percent after Exane BNP Paribas lowered its forecast for the company’s shares.

Alcatel-Lucent SA climbed 1 percent after Credit Suisse Group AG raised its recommendation on the maker of telecommunication equipment.

UBS, Switzerland’s biggest bank, jumped 3.8 percent to 14.81 Swiss francs. Richemont, the second-largest luxury-goods company, rallied 5.3 percent to 75.15 francs. Swatch Group AG the biggest watchmaker, climbed 4.2 percent to 480.50 francs.