Germany's Benchmark DAX Index Declines, Led by Volkswagen, BMW, Infineon
German stocks snapped two days of gains as carmakers fell and a U.S. report showed that disposable incomes dropped for the first time since January.
Volkswagen AG and Bayerische Motoren Werke AG slid more than 1 percent as Renault-Nissan Chief Executive Officer Carlos Ghosn said U.S. car sales were below expectations. Infineon Technologies AG, Europe’s second-largest semiconductor maker, sank 3.7 percent after saying Intel Corp. of the U.S. agreed to buy its wireless unit for about $1.4 billion.
The benchmark DAX Index slipped 0.7 percent to 5,912.41 at the close of trading at 5:30 p.m. in Frankfurt. The measure has retreated 6.9 percent from this year’s high on Aug. 9 as the Federal Reserve said the pace of recovery in the U.S. economy will probably be “more modest” than forecast. The decline has pushed the DAX to its cheapest valuation relative to companies’ reported earnings since 2008, according to data compiled by Bloomberg. The broader HDAX Index decreased 0.6 percent today.
Disposable incomes, or the money left over after taxes, dropped after adjusting for inflation, showing how the lack of jobs may prevent spending from strengthening, according to U.S. Commerce Department figures today. Incomes rose 0.2 percent and the savings rate dropped.
Ghosn said at a media roundtable in Abu Dhabi today that car sales in the U.S. are “a bit weaker” than forecast and the recovery worldwide “a bit bumpy.”
Carmakers Decline
Volkswagen, Europe’s largest carmaker, fell 1.1 percent to 78.12 euros and BMW dropped 1.3 percent to 41.21 euros as a group of automotive stocks was the worst performer in the Stoxx Europe 600 Index.
Daimler AG declined 0.7 percent to 38.13 euros. Der Spiegel reported 2010 sales of the Smart two-seater car will probably fall below 100,000 units this year from 114,000 in 2009 because of a lack of different models and sinking U.S. demand.
Infineon retreated 3.6 percent to 4.44 euros. The all-cash transaction is expected to close in the first quarter of 2011, Infineon said today.
“The market expected a slightly higher sale price for the wireless unit,” said Jan Christian Goehmann, an analyst at Norddeutsche Landesbank Girozentrale who recommends buying Infineon shares. “The company was in a comfortable position where it didn’t have to sell, and that is the decisive issue.”
TUI AG, the owner of Europe’s largest tour operator, climbed 5.1 percent to 7.96 euros after its biggest investor, Russian billionaire Alexei Mordashov, told regulators he wants to gain a blocking minority stake by raising his holding from more than 15 percent to over 25 percent.
Smartrac NV jumped 17 percent to 19.92 euros, its highest price in more than two years, after the Dutch maker of security transponders used in U.S. passports said it received a takeover bid from One Equity Partners.
To contact the reporter on this story: Alex Webb in Frankfurt at awebb21@bloomberg.net or
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