Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s largest lenders, both lost more than 3 percent as the euro fell and the cost of insuring against a Spanish default jumped to a record. Daimler AG (DAI) paced a selloff in European carmakers.
The DAX Index sank 2.4 percent to 6,583.9 at the close in London, extending its retreat this week to 2.8 percent for a fourth week of losses. The gauge has still gained 12 percent this year as the euro area’s leaders sought to contain the debt crisis and as U.S. economic reports beat estimates. The broader HDAX Index lost 2.2 percent today.
“There is a very good chance the European Central Bank will start” buying bonds, said Justin Urquhart Stewart, who helps oversee about $3 billion at 7 Investment Management in London, in a Bloomberg Television Interview. “We will get short-term storms from time to time as people come in and upset the markets as you can see with bond prices.”
Stocks extended declines after a gauge of U.S. consumer confidence unexpectedly fell this month. Equities climbed yesterday after Federal Reserve Vice Chairman Janet Yellen said that interest rates will remain low to support the recovery of the world’s largest economy.
German Inflation Slows
In Germany, inflation slowed in March as energy prices rose at a weaker pace than a year earlier. Inflation (GRCP2HYY) eased to 2.3 percent from 2.5 percent in February, the Federal Statistics Office in Wiesbaden said today, confirming a March 28 estimate. Prices rose 0.4 percent in the month.
Deutsche Bank dropped 3.2 percent to 34.03 euros and Commerzbank lost 4.3 percent to 1.64 euros, pacing a selloff in European banks, as the euro fell against the dollar amid speculation the ECB may need to restart its government bond purchase program as the debt crisis worsens.
Spain’s 10-year yield climbed toward 6 percent after data showed Spanish banks’ borrowings from the ECB jumped by almost 50 percent in March. Credit-default swaps on Spain jumped 17 basis points to 498 in London, according to CMA.
Daimler lost 3.5 percent to 40.30 euros and Bayerische Motoren Werke AG (BMW) fell 1.7 percent to 67.50 euros as a gauge of European carmakers tumbled more than 2.5 percent today after China reported slower-than-expected economic growth. Daimler generates 15 percent of its vehicle sales in China, according to data compiled by Bloomberg.
Bayer, Aixtron Fall
Bayer AG (BAYN) slid 2.5 percent to 50.50 euros. Germany’s largest drugmaker will pay at least $110 million to settle about 500 lawsuits over claims that its Yasmin line of birth-control pills caused blood clots, people familiar with the agreements said.
Deutsche Telekom AG dropped 2 percent to 8.56 euros as Reuters reported the phone company is mulling a bid for Tele Columbus. Analysts at Banco Espirito Santo SA said on March 26 that Kabel Deutschland Holding AG was the “natural strategic buyer” of the company. Kabel fell 0.6 percent to 46.60 euros.
Stada Arzneimittel AG (SAZ) tumbled 4.9 percent to 23.48 euros. JPMorgan Chase & Co. downgraded the generic-drug maker to neutral, the equivalent of hold, from overweight.
Aixtron SE, a manufacturer of production equipment for semiconductor and lighting makers, rose 2.6 percent to 13.72 euros after Berenberg Bank AG said in a report that the lighting sector is attractive because of rising average selling prices and structural demand for energy-efficient products.
Berenberg also upgraded U.S. peer, Cree Inc. (CREE), to hold from sell, citing an expected boost in demand driven by lighting applications.
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