German Shares Decline After Manufacturing, Services Data

German stocks declined as a manufacturing index contracted to its lowest level since 2009, the Dutch prime minister failed to reach an agreement on austerity measures with a coalition party, and carmakers were hurt by expectations of slower Chinese sales.

Bayerische Motoren Werke AG (BMW) lost after predicting the pace of sales growth in China will ease in coming months. Deutsche Bank and Commerzbank AG (CBK), Germany’s two largest lenders, fell.

The DAX (DAX) declined 3.4 percent to 6,523.0 at the close of trading in Frankfurt, its lowest level in almost three months. The gauge rose 2.5 percent last week as a measure of the country’s business confidence unexpectedly advanced to a nine- month high in April. The HDAX Index also fell 3.4 percent today.

The Dutch government’s failed budget consolidation “might have left the impression that the core euro zone countries are not willing to address the problem of high budget deficits,” Alexander Kraemer, a cross-asset strategist at Commerzbank in Frankfurt, wrote in an e-mail. “This may, in the eyes of market participants, result in a higher likelihood that budget consolidation in the periphery may as well not be pushed forward.”

A German manufacturing index based on a survey of purchasing managers fell to 46.3 in April, from 48.4 in March, London-based Markit Economics said in an initial estimate today. Economists had forecast an increase to 49 according to the median of 17 estimates in a Bloomberg News survey. A reading below 50 indicates contraction.

Euro PMI

A separate report showed euro-area services and manufacturing contracted more than estimated in April. A composite index based on a survey of purchasing managers in both industries fell to 47.4, a five-month low, from 49.1 in March, London-based Markit Economics said in an initial estimate. Economists had forecast an increase to 49.3, according to the median of 17 estimates in a Bloomberg News survey.

In China, manufacturing may shrink for a sixth month in April, keeping pressure on officials to adopt more policies to stimulate economic growth, a survey of companies showed.

The 49.1 preliminary reading of the purchasing managers’ index from HSBC Holdings Plc and Markit Economics today compares with a final 48.3 in March.

Dutch Austerity

Dutch Prime Minister Mark Rutte offered to quit, a move that would trigger early elections, as he sought to win parliamentary support for additional budget cuts needed to steer the Netherlands clear of the debt crisis. Queen Beatrix will consider the resignation, the government’s information service said.

In France, Socialist Francois Hollande and President Nicolas Sarkozy progressed to the final round of the nation’s elections.

Hollande won 28.6 percent of the vote against 27.1 percent for Sarkozy, the interior ministry said in Paris. The anti- immigrant Marine Le Pen got 18.1 percent, a record for her party that surpassed the predictions of all pollsters. The second round takes place on May 6.

BMW slid 4.1 percent to 67 euros. The world’s largest luxury automaker expects the pace of sales growth in China to ease in the coming months, Ian Robertson, the company’s sales chief, told reporters at a briefing in Beijing today.

BMW continues to expect double-digit sales growth in China this year, while the environment in Europe will be “challenging,” he said. BMW has seen some easing of prices in China, Robertson said. A gauge of auto-related companies was the second-worst performer among the 19 industry groups in the Stoxx 600, tumbling 3.6 percent.

Volkswagen Falls

Preferred shares of Volkswagen AG (VOW), Europe’s largest automaker, fell 3.3 percent to 121.25 euros, dropping for a fourth day. Daimler AG (DAI), the world’s third-largest maker of luxury cars, lost 4.2 percent to 39.50 euros. Porsche SE fell 2.1 percent to 40.92 euros.

Deutsche Bank fell 4.4 percent to 32.98 euros, its lowest level in almost three months. The lender will probably book an additional charge of as much as 400 million euros ($528 million) tied to the sale of Actavis Group hf to Watson Pharmaceuticals Inc., people familiar with the process said.

Commerzbank dropped 5.6 percent to 1.54 euros, its lowest in three months. The lender may fall short of earnings targets of 1.2 billion euros in the first half of 2012, Nomura Holdings Inc. said. Commerzbank reports first-quarter results May 9.

TUI Drops

TUI AG, owner of Europe’s largest travel company, dropped 3.8 percent to 4.91 euros, its fourth day of declines, after Commerzbank said an initial public offering of the Hapag-Lloyd shipping unit probably won’t happen before the end of the year.

Deutsche Post AG declined 5.3 percent to 13.30 euros. PostNL NV’s German TNT Post unit and other postal companies operating in Germany will set up a joint delivery network to challenge market leader Deutsche Post, Frankfurter Allgemeine Zeitung reported, citing TNT Post.

ThyssenKrupp AG (TKA), Germany’s largest steelmaker, fell 4.6 percent to 17.46 euros. HeidelbergCement, the world’s third- largest cement maker, tumbled 5.5 percent to 40.52 euros.

Q-Cells SE rose 21 percent to 15.7 euro cents. The German solar-cell maker that filed for insolvency this month has resumed production amid a push to sell the company.

Centrotherm Photovoltaics AG surged 7.1 percent to 7.10 euros. The stock was upgraded to buy from hold at Commerzbank.

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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