German Stocks Witness Biggest Weekly Drop of the Year
German stocks dropped for a fourth day, dragging the DAX Index toward the biggest weekly decline of 2012, as a report showed employers in the U.S. added fewer workers than forecast last month.
MAN SE (MAN) plunged to the lowest in almost two months. Linde AG (LIN) lost 1.2 percent as analysts said earnings growth may slow. Wacker Chemie AG (WCH), the world’s second-biggest maker of solar- grade silicon, fell 6.1 percent after reporting a decrease in earnings. Metro AG (MEO) slid for a third day after analysts reduced price forecasts for the retailer.
The benchmark DAX slid 2 percent to 6,561.47 at the 5:30 p.m. close in Frankfurt, for a weekly loss of 3.5 percent. The gauge has still gained 11 percent this year as investors speculated that companies in Germany will do better than those in the euro area’s most indebted nations. The broader HDAX Index dropped 2 percent today.
“The jobs number was disappointing and our clients have been selling,” Duarte Caldas, a market strategist at IG Markets in Lisbon, said in a phone interview. “They are preparing for a bit of volatility in the weeks ahead.”
Employers in the U.S. added fewer workers than forecast in April and the jobless rate unexpectedly declined as people left the labor force, underscoring concern the world’s largest economy may be losing speed. Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 rise in March that was more than initially estimated, Labor Department figures showed. The median estimate of 85 economists surveyed by Bloomberg called for a 160,000 advance.
Four elections this weekend have the potential to reshape the European political map and show how the response to the financial crisis remains hostage to the whims of voters on both sides of the region’s economic divide. The polls capture the popular agitation after emergency loan packages in Europe worth 386 billion euros ($508 billion) and a focus on deficit reduction failed to halt the debt crisis.
Recession-weary Greeks may pick a new government and polls show the French will probably install Francois Hollande as the country’s first Socialist president since Francois Mitterrand in 1995. Local elections will test Italy’s political pulse, and voters in a northern German state may deal a symbolic blow to Chancellor Angela Merkel’s coalition.
“The two biggest risks for the weekend ahead are France and Greece,” Caldas said. “Clients have not been willing to take more risk.”
EON AG, Germany’s biggest utility, removed 30.1 points from the DAX (DAX) today as the shareholders lost the right to the latest dividend. Adjusted for the right to the 1-euro payment, the shares fell 1.8 percent to 15.89 euros.
MAN, the German truckmaker controlled by car manufacturer Volkswagen, sank 4.9 percent to 88.41 euros, the lowest since March 7. The stock was cut to sell from buy at NordLB.
Linde fell 1.2 percent to 127.05 euros, paring this year’s advance to 11 percent. The world’s second-biggest maker of industrial gases reported first-quarter profit that beat analyst estimates on higher demand in China and the U.S. Morgan Stanley analysts said the earnings may not be strong enough to trigger estimate upgrades.
“Linde’s recent outperformance within the global gases industry, and subsequent upgrade momentum, has begun to moderate,” Morgan Stanley analysts led by Peter J. Mackey in London wrote in a report today. “We see little scope for further upgrades near-term.”
Wacker Chemie declined 6.1 percent to 59.80 euros as the company said first-quarter net income fell to 40 million euros from 168 million euros a year earlier.
“Earnings quality was poor,” wrote WestLB analysts in a report. “We are concerned about the outlook with respect to polysilicon margins if the current strong momentum in demand should slow in the second half and new capacities come on stream.”
Metro declined for a third day, falling 2.7 percent to 22.94 euros. Analysts at UBS AG and Nomura Holdings Inc. reduced their price estimates on the shares after the biggest German retailer yesterday reported a wider-than-expected first-quarter loss.
Preferred shares of Volkswagen declined 3.5 percent to 139.95 euros as automakers slid. Daimler AG (DAI) dropped 3.5 percent to 39.29 euros. Bayerische Motoren Werke AG (BMW), the world’s largest maker of luxury vehicles, slid 3.8 percent to 68.99 euros.
Merck KGaA (MRK) dropped 3 percent to 81.55 euros. The drugmaker was cut to underweight, the equivalent of sell, from equal weight at Barclays Plc.
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