German stocks declined as European Central Bank President Mario Draghi said the debt crisis is hurting Europe’s largest economy and the European Commission cut its growth forecasts for the euro area, offsetting optimism about U.S. President Barack Obama’s re-election.
Infineon Technologies AG (IFX) and Deutsche Bank AG (DBK) led retreating shares. Hochtief AG (HOT) climbed 3.1 percent after the builder swung to a profit in the third quarter and reiterated its full-year guidance.
The DAX (DAX) fell 2 percent to 7,232.83 at the close of trading in Frankfurt, after earlier rising as much as 0.8 percent. The gauge added 0.7 percent yesterday as Americans went to the polls to elect their president and companies including Hannover Re and Fraport AG reported earnings that beat estimates. The broader HDAX Index retreated 1.8 percent today.
“The comments on the German economy are weighing on the market,” said Yves Marcais, an equity sales trader at Global Equities in Paris. “But the question is: was this morning’s gain justified? Can Obama’s election pull the market higher as he has said the country has to reduce the deficit? We have the fiscal cliff ahead.”
Draghi said the debt crisis is beginning to take its toll on the German economy. “Germany has so far been largely insulated from some of the difficulties elsewhere in the euro area,” he said at a conference in Frankfurt today. “But the latest data suggest that these developments are now starting to affect the German economy.”
The European Commission cut its growth forecast for the euro zone as the debt crisis ravages southern Europe and gnaws at the economic performance of export-driven Germany.
The 17-nation euro economy will expand 0.1 percent in 2013, down from a May forecast of 1 percent, the Brussels-based commission said today. It cut the forecast for Germany to 0.8 percent from 1.7 percent.
Obama defeated Republican Mitt Romney and now faces negotiating with Congress to avoid the so-called fiscal cliff of more than $600 billion in tax increases and spending cuts next year that threaten to slow U.S. growth.
The volume of shares changing hands in companies on the DAX was 43 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
Infineon, Europe’s second-biggest semiconductor maker, slid 4.8 percent to 5.40 euros.
Deutsche Bank, Germany’s largest lender lost 4.4 percent to 34.38 euros. Commerzbank AG, the second-biggest, retreated 3.2 percent to 1.51 euros.
A gauge of banking shares was the worst performer of the 19 industry groups on the Stoxx Europe 600 Index.
Munich Re lost 0.2 percent to 127.35 euros, erasing gains of as much as 3.5 percent. The world’s largest reinsurer reported third-quarter net profit that increased almost fourfold to 1.13 billion euros, beating the 756 million-euro average analyst estimate in a Bloomberg survey.
Investment income surged 65 percent to 2.22 billion euros. The company also raised its full-year earnings forecast.
“We are very optimistic of realizing a profit in the region of 3 billion euros for 2012,” Chief Financial Officer Joerg Schneider said in a statement.
Munich Re Chief Executive Officer Nikolaus von Bomhard said in August he expected the company to “slightly surpass” its full-year profit target of about 2.5 billion euros.
Hochtief climbed 3.1 percent to 39.77 euros after the builder confirmed its 2012 forecasts as it benefits from German urban residential demand. The company swung to a pretax profit of 354.7 million euros ($455.6 million) for the third quarter, compared with a 101.6 million-euro loss a year earlier. It also reported a 17 percent increase in nine-month sales to 18.51 billion euros.
Axel Springer AG (SPR) increased 0.3 percent to 33.24 euros, trimming earlier gains of as much as 3.7 percent. Europe’s biggest newspaper publisher posted third-quarter profit and revenue that missed analyst estimates.
Still, digital media growth shows the company is on the “right track” in the shift to digital, DZ Bank AG said in note.
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