German Stocks Retreat as K+S, Salzgitter Drop; Shares of Q-Cells Advance
German stocks fell for a third day as reports showed European industrial production unexpectedly declined and jobless claims in the U.S. climbed to a five-month high, fanning concern about the health of the economy.
K+S AG declined after it set new 2010 forecasts for net income and sales that fell short of analyst estimates. Salzgitter AG slipped after reporting a first-half loss. Q-Cells SE jumped the most in two months. Centrotherm Photovoltaics AG and Jungheinrich AG advanced after they lifted their full-year earnings forecasts.
The benchmark DAX Index lost 0.3 percent to 6,135.17 at the 5;30 p.m. close in Frankfurt, the lowest level this month. The benchmark gauge for German stocks has retreated 2.4 percent since the U.S. Federal Reserve said on Aug. 10 that the pace of economic recovery is likely to be “more modest” than forecast. The broader HDAX Index dropped 0.4 percent today.
“There’s a bit more nervousness about the economy since Tuesday,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn. “The economic news coming from the euro zone is a bit weak. The sentiment among investors at the moment is to take some profits and move towards defensive stocks.”
The combined industrial output of the 16 nations that use the euro unexpectedly dropped 0.1 percent in June, compared with a 1.1 percent increase in May, the European Union’s statistics office in Luxembourg said today. Economists had projected a 0.6 percent gain, according to the median of 32 forecasts in a Bloomberg survey.
Initial jobless claims in the U.S. rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid February, Labor Department figures showed. The number of people receiving unemployment benefits dropped, while those getting supplemental benefits surged by 1.34 million, reflecting the government’s extension of eligibility.
“The market is screaming for improvement in employment data to restore confidence in stocks,” said Daniel Weston, portfolio manager at Schroeder Equities GmbH in Munich. “As today’s jobs data disappoints, the market has sold off rapidly, adding fuel to the fire for momentum selling into this weak market.”
K+S slid 1.7 percent to 41.29 euros, the stock’s lowest close this month. Sales will reach as much as 5 billion euros ($6.4 billion) this year, with operating profit rising to as much as 600 million euros, the Kassel, Germany-based company said in a statement. Analysts were expecting profit of 648.5 million euros, according to Paul Walsh at Morgan Stanley.
“Guidance came below consensus forecasts, despite a more optimistic view on potash volumes,” Walsh wrote in a note.
Salzgitter, Germany’s second-biggest steelmaker, lost 2.7 percent to 51.10 euros. The company reported a 3.5 million-euro first-half after-tax loss compared with a 165 million-euro loss a year earlier.
Bayerische Motoren Werke AG and Daimler AG, the world’s biggest makers of luxury cars, lost 1.2 percent to 41.90 euros and 2.8 percent to 39.07 euros, respectively. European carmakers fell 1.7 percent today for the biggest decline among 19 industry groups in the Stoxx Europe 600 Index.
Nordex SE tumbled 4.2 percent to 7.37 euros as the maker of wind turbines was downgraded to “neutral” from “buy” at Goldman Sachs Group Inc.
Q-Cells soared 11 percent to 5.80 euros, the biggest jump since June, after the solar company reported second-quarter net income of 35.2 million euros and reiterated its forecast of a “positive” operating result in 2010.
Centrotherm Photovoltaics rallied 7.5 percent to 33.94 euros as the solar company raised its full-year revenue forecast. Sales in 2010 will be 580 million euros to 600 million euros, compared with an earlier forecast of 550 million euros to 580 million euros, the company said.
Jungheinrich rose 3.7 percent to 22 euros. Germany’s second-largest maker of forklift trucks raised its full-year operating profit forecast to between 60 million euros and 80 million euros on sales of 1.75 billion euros.