German Stocks Slide as Economy Contracts; SAP Sinks

German stocks tumbled the most in two months as Europe’s biggest economy contracted in the final quarter of 2012 amid the sovereign-debt crisis and cooling export demand.

SAP AG (SAP) sank the most in six months as the world’s largest maker of business-management software reported earnings that missed projections. RWE AG (RWE) fell 3.1 percent as JPMorgan Chase & Co. and Exane BNP Paribas downgraded the shares. Infineon Technologies AG (IFX) climbed 2.3 percent as Exane recommended Europe’s second-largest semiconductor manufacturer.

The DAX Index (DAX) dropped 0.7 percent to 7,675.91 at the close of trading in Frankfurt, the biggest decline since Nov. 16. The measure has still gained 0.8 percent this year as U.S. lawmakers agreed on a compromise budget to prevent most scheduled tax increases and delay spending cuts. The broader HDAX Index also retreated 0.7 percent today.

“There is a little bit of disappointment because of the GDP figures,” Robert Halver, head of capital markets research at Baader Bank AG in Frankfurt, said in a telephone interview. “The fourth quarter of 2012 should be the only one showing negative growth, with the following quarters showing better figures of economic activity. This is just a negative blink, not a sustainable trend.”

The volume of shares changing hands on the DAX was 26 percent higher than the average of the last 30 days, data compiled by Bloomberg showed.

Economy Contracts

German fourth-quarter gross domestic product may have dropped as much as 0.5 percent from the previous period, the Federal Statistics Office in Wiesbaden said today in a preliminary estimate. In 2012, growth slowed to 0.7 percent from 3 percent in 2011, it said. Economists had forecast expansion of 0.8 percent for last year, according to the median of 28 estimates in a Bloomberg News survey.

U.S. Treasury Secretary Timothy F. Geithner said so-called extraordinary measures he’s taking to avoid breaching the debt ceiling would work only until mid-February to early March and warned that failure by Congress to raise the limit could “impose severe economic hardship” on the country.

President Barack Obama at a news conference yesterday vowed he won’t negotiate over raising the government’s debt ceiling while offering to deal on a separate track with the deficit reduction demanded by Republicans. Obama warned of economic calamity if the $16.4 trillion borrowing limit isn’t lifted.

SAP tumbled 3.9 percent to 58.70 euros, the biggest drop since July 6. The company said fourth-quarter operating profit excluding some items rose about 10 percent to 1.96 billion euros ($2.61 billion), missing the 2 billion-euro average of analyst estimates compiled by Bloomberg.

RWE Drops

RWE fell 3.1 percent to 28.77 euros, a seven-month low. JPMorgan cut Germany’s second-biggest utility to underweight, the equivalent of sell, from neutral, citing a deteriorating earnings outlook and high levels of debt.

Exane downgraded the shares to neutral from outperform, saying the growing trend for energy efficiency will have a negative effect on hard-coal generation.

EON SE dropped 1.5 percent to 13.99 euros, the lowest price in a month. The company sold a 24.5 percent stake in Slovensky Plynarensky Priemysel AS to Energeticky & Prumyslovy Holding AS, the second-largest Czech utility that’s co-owned by billionaire Petr Kellner, for 1.3 billion euros.

Salzgitter AG (SZG), Germany’s second-biggest steelmaker, retreated 2.3 percent to 36.44 euros, a fourth day of losses. Deutsche Bank AG downgraded the stock to hold from buy.

Infineon advanced 2.3 percent to 6.64 euros, snapping two days of declines, as the stock was raised to outperform from neutral at Exane.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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