German stocks fell, erasing last week’s gain, as business sentiment missed estimates, optimism among Chinese manufacturers declined, and Germany and France clashed over the timing of oversight of the region’s banks.
Commerzbank AG (CBK) slid 3.7 percent after Nomura Holdings Inc. cut its recommendation on the shares. Continental AG (CON), Germany’s biggest tiremaker, fell 2.5 percent as it traded in the DAX Index for the first day since replacing Metro AG.
The DAX dropped 0.5 percent to 7,413.16 at the close of trading in Frankfurt, erasing last week’s 0.5 percent gain. Still, the benchmark has rallied 24 percent from this year’s low on June 5 as European Central Bank policy makers approved an unlimited bond-buying program and the Federal Reserve started a third round of asset purchases. The broader HDAX Index fell 0.6 percent today.
“The Ifo reading was weak, and that’s influencing sentiment across Europe,” said Henrik Henriksen, the chief strategist at PFA Pension A/S in Copenhagen where he helps oversee $55 billion. “Germany has been the engine pulling Europe and if that economy is also weakening it will have repercussions across the continent.”
German business confidence unexpectedly fell for a fifth straight month in September as the sovereign-debt crisis clouded the economic outlook.
The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 101.4 from 102.3 in August. That’s the lowest reading since February 2010. Economists predicted an increase to 102.5, according to the median of 37 forecasts in a Bloomberg News survey.
In China, manufacturers and retailers are less optimistic about sales than they were three months ago and are cutting jobs, according to the findings of a survey by New York-based researcher CBB International LLC.
The findings build on economic data indicating that manufacturing, trade and retail sales slowed in the third quarter. They point to a seventh straight deceleration in quarterly growth and potentially the weakest annual expansion for the world’s second-largest economy in 22 years.
German Chancellor Angela Merkel rejected French President Francois Hollande’s appeal to activate oversight of the banking union “the earlier, the better.” Deadlock over regulation may delay a key building block in resolving the single currency’s debt crisis.
Speaking at a meeting on Sept. 22 near Ludwigsburg, Germany, Merkel said that the proposed banking union “has to be thorough, the quality has to be good and then we’ll see how long it takes.”
Commerzbank, Germany’s second-largest lender, fell 3.7 percent to 1.52 euros. Nomura cut its recommendation on the shares to reduce, the equivalent of sell, from neutral. Deutsche Bank AG, the country’s largest lender, declined 0.9 percent to 32.79 euros.
Continental dropped 2.5 percent to 81.49 euros on its first day back in the DAX (DAX) index after being reinstated following a 45- month absence.
A gauge of carmakers on the Stoxx Europe 600 Index retreated 0.6 percent. Daimler AG (DAI), the world’s third-largest maker of luxury cars, lost 0.3 percent to 40.10 euros, after earlier falling as much as 1.5 percent. Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, fell 0.3 percent to 59.64 euros, paring an earlier loss of as much as 1.5 percent.
Rhoen-Klinikum AG slid 0.9 percent to 15 euros after Sana Kliniken AG denied speculation that it planned to file a takeover offer for the German hospital operator that was the target of an unsuccessful bid by Fresenius SE.
The conditions that led to the Fresenius bid’s failure are unchanged, making an offer by Sana futile, the Ismaning, Germany-based company said in an e-mail today. Fresenius rose 1.3 percent to 88.46 euros
MorphoSys AG (MOR) jumped 8.9 percent to 24.28 euros after Commerzbank raised its target price for the German biotechnology company’s shares to 30 euros from 27 euros apiece.
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