Watches of Swiss watchmaker Swatch are displayed for sale in a watchmaker's store in Vienna, Austria January 26, 2018. REUTERS/Leonhard Foeger

By John Revill

ZURICH (Reuters) -Shares of Richemont and Swatch Group, owners of luxury Swiss watch brands, rose on Tuesday after U.S. President Donald Trump said he was working with Switzerland on a deal to lower the 39% tariff rate on Swiss exports to the United States.

Shares of Swatch, whose brands include Omega, Tissot and Longines, gained 4.2% in early trading. Richemont, which owns Cartier, IWC and Piaget, was 2% higher.

Trump announced at the end of July that Swiss exports to the U.S. would be subject to a 39% tariff from August 7, among the highest duties levied in his global trade reset.

The Swiss government declined to comment on Monday after Bloomberg reported Bern was close to reaching a deal to reduce tariffs on its exports to 15%.

"We're working on a deal to get their tariffs a little bit lower," Trump said on Monday. "I haven't set any number, but we're going to be working on something to help Switzerland."

Swatch said on Tuesday it would not comment on any deals before they had been implemented.

Richemont did not respond to a request for comment.

BIGGEST MARKET FOR SWISS WATCHES

The United States is the biggest market for Swiss watches, accounting for 19% of all Swiss watch exports, according to the Swiss watch industry federation.

"Resolving the tariff dispute would be an early Christmas present for both listed Swiss luxury players and for the whole Swiss watch industry," said Zuercher Kantonalbank analyst Patrik Schwendimann.

The U.S. is also the biggest market for luxury group Richemont - whose other brands include Cartier, Van Cleef & Arpels, Chloe and Montblanc - accounting for an estimated 21% of group sales last year, Schwendimann said. Swatch generated 15% of its sales there, he said.

Swatch had a higher exposure to U.S. tariffs because most of its exports came from Switzerland, while more than half of Richemont's exports do not originate in Switzerland, Schwendimann said, referring to jewellery made in Italy and France.

Kepler Cheuvreux analyst Jon Cox said a cut in tariffs to 15% would ease pressure on profitability.

"Price increases can also put off consumers, who might either shop abroad or buy a product that was not made in Switzerland," said Cox.

(Reporting by John Revill; Editing by Louise Heavens and Susan Fenton)