German stocks fell as investors speculated that a bailout for Ireland’s banks won’t stop the sovereign-debt crisis from infecting other European economies.
Deutsche Bank AG and Commerzbank AG dropped with European banking shares. K+S AG retreated after the company announced it will buy Potash One Inc. Bayerische Motoren Werke AG and Volkswagen AG each added at least 1.8 percent, leading European carmakers higher. Pfeiffer Vacuum Technology AG climbed 2.5 percent as HSBC Holdings Plc recommended the shares.
The benchmark DAX Index decreased 0.3 percent to 6,822.05 at the 5:30 p.m. close in Frankfurt, the first retreat in four days. The gauge rallied 1.6 percent last week as the European Union and International Monetary Fund discussed a bailout for Ireland’s battered banks. The broader HDAX Index also slid 0.3 percent today.
“The European Union is stabilizing the situation, but I am worried about Spain,” said Jacques Porta, a Paris-based fund manager at Ofi Patrimoine, who helps oversee about $425 million in stocks. “Macro-economic data should give markets some support until the end of the year.”
Ireland became the second euro area country to require rescuing as the cost of saving its banks threatened a rerun of the Greek debt crisis that destabilized the euro area’s currency. Irish Finance Minister Brian Lenihan said the rescue will total “less than” 100 billion euros ($136.2 billion).
Lenihan told reporters late yesterday that Ireland will channel some of the EU and IMF money to lenders through a “contingent” capital fund. The rest of the package, which Goldman Sachs Group Inc. estimates may total 95 billion euros, will help Ireland avoid selling bonds.
Deutsche Bank, Commerzbank
Deutsche Bank, Germany’s largest bank, and Commerzbank, the country’s second biggest, fell 1.4 percent to 39.87 euros and 1.9 percent to 5.98 euros, respectively. A gauge of European banking shares posted the biggest decline among 19 industry groups in the Stoxx Europe 600 Index, retreating 2 percent.
“The banks were too big a problem for the country,” Lenihan said in Dublin. “The key issue all the time for the government is to ensure that we do not have a collapse of the banking sector.”
K+S lost 2.1 percent to 48.25 euros, the first decline in four days. Europe’s largest potash producer agreed to buy Canada’s Potash One for C$434 million ($425.9 million) to gain access to reserves of the crop nutrient.
Shareholders of Potash One will get C$4.50 a share in a “friendly” takeover that the Canadian company’s board has accepted, K+S said in a release today. The offer is 24 percent higher than Potash One’s closing price on Nov. 19.
BMW, the world’s biggest maker of luxury cars, rose 1.8 percent to 57.69 euros, while Volkswagen, Europe’s largest carmaker by sales, advanced 2.6 percent to 125.90 euros. European carmakers posted the best performance among the 19 industry groups in the Stoxx 600, adding 0.9 percent.
Porsche SE soared 4.9 percent to 52.43 euros, the highest price in a year. The carmaker’s merger with Volkswagen is continuing, Chief Financial Officer Hans Dieter Poetsch told Frankfurter Allgemeine Sonntagszeitung. Still, “hurdles” in the process may delay the completion of the merger beyond the scheduled date in the second half of next year, he said.
BofA Merrill Lynch Global Research resumed its “buy” recommendations for Porsche and Volkswagen, saying the companies will probably not combine.
Continental AG, the world’s biggest maker of car instruments and display systems, climbed 1.5 percent to 60.92 euros.
The company will move a scheduled April 1, 2011, pay increase for more than 25,000 workers to Feb. 1, according to an e-mailed statement. Also, employees around the world will receive a total of 45 million euros in one-off payments, the company said, citing their contribution to helping the company recover from the economic crisis.
Pfeiffer Vacuum Technology rallied 2.5 percent to 87.88 euros as the vacuum pump maker was raised to “overweight” from “neutral” at HSBC.
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