German Stocks Decline for a Second Straight Day Amid Bank-Capital Concern

German stocks (DAX) fell for a second day as banks retreated amid concern they will have to raise more capital, overshadowing a report showing that companies in the U.S. added more workers than economists had predicted.

Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s largest lenders, declined more than 4 percent. HeidelbergCement AG (HEI) dropped 2.8 percent after Credit Suisse Group AG cut its rating. Metro AG (MEO), Germany’s largest retailer (MEO), slipped 0.8 percent as the nation’s consumer spending declined. Daimler AG (DAI) and Volkswagen AG (VOW) paced gains among European carmakers.

The benchmark DAX Index lost 0.3 percent to 6,095.99 at the close in Frankfurt, extending yesterday’s 0.9 percent slide. The broader HDAX Index slipped 0.2 percent today.

“Even if Europe can avoid a sovereign-debt collapse, the deleveraging by the European banking system is likely to produce at least a mild recession in 2012,” Russ Koesterich, the San Francisco-based global chief investment strategist at the IShares unit of BlackRock Inc., wrote in a note today.

France sold 7.96 billion euros ($10.2 billion) of debt today as borrowing costs rose. The government sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent from 3.18 percent in an auction on Dec. 1. The nation also borrowed debt maturing in 2023, 2035 and 2041.

In Greece, Prime Minister Lucas Papademos said after European markets closed yesterday that the country faces a disorderly default as soon as March if it doesn’t accept steeper income cuts to secure further financing from international creditors.

U.S. Private Payrolls

American companies added 325,000 workers in December, more than economists had forecast, adding to evidence the labor market was gaining momentum heading into 2012, figures from the Roseland, New Jersey-based ADP Employer Services showed.

Applications for U.S. jobless benefits (INJCJC) decreased by 15,000 to 372,000 in the week ended Dec. 31, Labor Department figures showed today. The median estimate (INJCJC) of 38 economists in a Bloomberg News survey predicted 375,000 claims.

Deutsche Bank and Commerzbank dropped 5.6 percent to 27.97 euros and 4.5 percent to 1.22 euros, respectively. Bank stocks were the worst performers of the 19 industry groups in the benchmark Stoxx Europe 600 Index (SXXP).

HeidelbergCement (HEI) fell 2.8 percent to 33.61 euros as Credit Suisse downgraded the cement producer to “underperform” from “outperform.”

Metro dropped 0.8 percent to 29.09 euros. German retail sales, adjusted for inflation and seasonal swings, decreased 0.9 percent in November, the Federal Statistics Office in Wiesbaden said today. Economists in a Bloomberg News survey had forecast a gain of 0.2 percent.

Brenntag Drops

Brenntag AG (BNR) fell 1.2 percent to 71.40 euros, dropping for a second day. Brachem Acquisition SCA sold an 8.7 percent stake in the chemical distributor for about 315 million euros.

Stada Arzneimittel AG (SAZ) sank 3.6 percent to 19.68 euros. Commerzbank cut the shares of the generic drugmaker to “add” from “buy,” while Jefferies Group Inc. lowered its recommendation to “hold” from “buy.”

Daimler and Volkswagen added 1.4 percent to 36.89 euros and 2.6 percent to 126.20 euros, respectively, following gains among European carmakers.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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