German stocks fell, led by declines in Metro AG (MEO) and carmakers, as investors speculated that the European Union’s leaders will fail to find an immediate solution to the region’s debt crisis.
Metro, Germany’s biggest retailer lost 4.7 percent after saying the global economic growth on which its forecasts depend may be curbed by Arab revolts and the Japanese earthquake. Bayerische Motoren Werke AG (BMW) and Volkswagen AG (VOW) led European carmakers lower. Solarworld AG (SWV) retreated 4.7 percent as Jefferies Group Inc. downgraded the stock. Rational AG (RAA) advanced after proposing to increase its dividend.
The benchmark DAX Index (DAX) slipped 0.5 percent to 6,780.97 at the 5:30 p.m. close in Frankfurt. Last week, the gauge tumbled the most in 10 months after Japan’s March 11 earthquake and subsequent tsunami damaged cooling systems at an atomic power plant, causing the worst nuclear accident since Chernobyl. The index had gained 4.6 percent over the previous three trading days. The broader HDAX Index (HDAX) slid 0.6 percent today.
“The DAX looks a little bit tamed today,” said Anita Paluch, a sales trader at ETX Capital in London. “The list of decliners is led by Metro that despite the good numbers fell as the presented outlook for growth in sales was rather gloomy given the situation in Japan and the Middle East.”
EU finance chiefs settled yesterday on how to enable a permanent rescue fund to lend 500 billion euros ($710 billion) as of 2013, while remaining divided over how to get the current stopgap fund to its full capacity. The yield on the Irish two- year note surged 88 basis points to 10.13 percent as of 1:41 p.m. in London, after reaching 10.18 percent, the most since 2003, when Bloomberg began collecting the data.
Portugal’s government may collapse tomorrow as the country’s parliament votes on a plan for fiscal austerity measures, JPMorgan Chase & Co. economist Nicola Mai said in a note e-mailed to investors.
Tokyo Electric Power Co. plans to restore power to the buildings housing the plant’s first four nuclear reactors. The utility needs to restart power before it can switch on the cooling systems. Reactors 5 and 6 were shut down before the earthquake and suffered little damage.
U.S. Defense Secretary Robert Gates said that the intensity of the military campaign in Libya will soon ease after America, the U.K. and France imposed a no-fly zone on Muammar Qaddafi’s regime, enabling rebels to push out of their stronghold in Benghazi in the east.
Metro, BMW Fall
Metro slid 4.7 percent to 47.74 euros, the lowest price since October. Debt crises confronting EU countries weigh on the economic outlook, Chief Executive Officer Eckhard Cordes said today at a press conference in Dusseldorf, Germany.
Adjusted earnings before interest and taxes may increase 10 percent in 2011, after gaining 19 percent in 2010, the company said. Underlying sales should rise by 4 percent, compared with Metro’s medium-term forecast of more than 6 percent growth.
BMW, the world’s biggest maker of luxury cars, lost 1.5 percent to 54.59 euros, the first decline in four days. Volkswagen, Europe’s largest carmaker, dropped 1.6 percent to 109.65 euros. European carmakers posted the worst performance among 19 industry groups in the benchmark Stoxx Europe 600 Index today, falling 1.5 percent.
SolarWorld slumped 4.7 percent to 9.89 euros as Jefferies downgraded the solar-cell manufacturer to “hold” from “buy.”
Rational increased 1.6 percent to 160 euros, the highest price in more than two weeks. The world’s largest supplier of automated cookers to caterers proposed a record payout to shareholders after 2010 revenue rose to its highest ever. Shareholders will get a 43 percent increase in dividend payments to 9 euros a share.
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