German stocks declined from a four-month high as Munich Re retreated, outweighing industrial production in the U.S. that increased in July.
Munich Re fell 1 percent following a report that its private-health insurance unit will close corporate group contracts to new business. Salzgitter AG (SZG) slid 4 percent as a gauge of commodity companies posted the biggest drop of the 19 industry groups on the Stoxx Europe 600 Index. TUI AG (TUI1) climbed 5.4 percent after Deutsche Bank AG increased its forecast for the share price.
The DAX dropped 0.4 percent to 6,946.8 at the close in Frankfurt, paring an earlier decline of as much as 0.9 percent. The equity benchmark yesterday rose to its highest level since April 3. It has rallied 16 percent from this year’s low on June 5 as central banks around the world took steps to bolster economic growth. The broader HDAX Index also retreated 0.4 percent today.
“General nervousness is creeping into the market,” said Chris Beauchamp, a market analyst at IG Index in London. “The worry now among investors is can we wait until September before more central-bank intervention? If U.S. data gets better, good news now is bad news because it makes more quantitative easing less likely.”
The volume of shares changing hands in companies listed on the DAX was 46 percent lower than the average of the past 30 days, data compiled by Bloomberg showed.
A Federal Reserve report today showed that industrial production in the U.S. climbed 0.6 percent in July, following a revised 0.1 percent gain in June that was smaller than previously reported. Economists had forecast a 0.5 percent increase, according to the Bloomberg survey median.
Munich Re retreated 1 percent to 119.35 euros. The reinsurer’s private health insurer, DKV, will reorganize its corporate business, closing unprofitable group contracts, according to a Financial Times Deutschland report today, which didn’t say where it got the information. DKV will close all corporate group contracts for new business and has begun talks with its customers about new terms, according to the German newspaper.
“Things are very fragile at the moment,” said Markus Huber, head of German sales trading at ETX Capital in London. “Even with just a 1 percent decline in growth in China, German companies might be even more impacted. Lower growth raises concerns that there is much more weakening to come. German carmakers are increasingly connected to China.”
TUI, the majority shareholder in Tui Travel Plc, advanced 5.4 percent to 5.95 euros as Deutsche Bank increased its forecast for the company’s share price to 7.30 euros from 6.60 euros. The brokerage cited increased numbers of visitors to Spain in a note dated today.
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