German stocks declined from their highest level in nearly five years after U.S. House Republicans canceled a vote on higher taxes for top earners, fueling concern that budget talks will fail.
Commerzbank AG (CBK) and Deutsche Bank AG (DBK), Germany’s two biggest lenders, retreated 3.4 percent and 1.6 percent respectively. ThyssenKrupp AG lost 1.3 percent as a gauge of industrial companies fell on the Stoxx Europe 600 Index. (SXXP)
The DAX (DAX) slipped 0.5 percent to 7,636.23 at the close of trading in Frankfurt, after rising to its highest since January 2008 yesterday. The gauge has still gained 0.5 percent this week amid speculation that U.S. lawmakers would agree a budget to avoid the so-called fiscal cliff of automatic tax increases and spending cuts totalling $607 billion due to come into effect next year. The broader HDAX Index also fell 0.5 percent today.
“Markets received their first shot across the bow last night with Boehner’s ‘plan B’ on the fiscal cliff being canceled,” Ion Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in a message. “European indexes are lower and volatility should be higher given that options and futures expire today. We could see some wild swings as traders and investors adjust their books ahead of the weekend and the Christmas holiday.”
The volume of shares changing hands on the DAX was 51 percent higher than the average of the last 30 days, data compiled by Bloomberg show. European stock trading may be more volatile than usual as futures and options contracts expire in a process known as quadruple witching.
U.S. House Speaker John Boehner, a Republican, scrapped a plan to allow higher tax rates on annual incomes above $1 million, yielding to resistance from party colleagues. Talks between Boehner and President Barack Obama are already stalled with 10 days to go before the year-end deadline for a budget compromise.
German consumer confidence will fall for a second month in January, GfK SE said. The Nuremberg, Germany-based market research company forecast today that its consumer-sentiment index, based on a survey of about 2,000 people, will fall to 5.6 from a revised 5.8 in December. Economists predicted no change from the previous month, according to the median of 28 estimates in a Bloomberg News survey.
Commerzbank and Deutsche Bank retreated 3.4 percent to 1.44 euros and 1.6 percent to 33 euros, respectively.
ThyssenKrupp AG (TKA), Germany’s largest steelmaker, fell 1.3 percent to 18.01 euros.
HeidelbergCement AG (HEI), the world’s third-largest maker of the building material, lost 1.8 percent to 45.82 euros as Hamburger Sparkasse AG downgraded the stock to hold from buy.
EON AG and RWE AG, Germany’s largest utility companies, fell 2 percent to 14.01 euros and 1.7 percent to 31.24 euros, respectively.
SMA Solar Technology AG (S92), Germany’s biggest solar company by market value, rose 3.7 percent to 18.95 euros after saying it agreed to buy a majority stake in Jiangsu Zeversolar New Energy Co. to gain access to the Chinese market.
SMA Solar will get 72.5 percent of the inverter maker in a deal that gives Zeversolar an enterprise value of 319 million yuan ($51 million), Niestetal-based SMA said in a statement. The agreement is subject to Chinese regulatory approval.
Continental AG, Europe’s second largest auto-parts supplier, rose 2.1 percent to 87.58 euros after it said it’s working to refinance a syndicated loan maturing in April 2014 to cut debt.
The company is in talks with banks on reducing the loan volume “slightly” to a total of 4.5 billion euros ($5.9 billion) and splitting it into two portions, the Hanover, Germany-based company said in a statement today.
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