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German Stocks Fall as ZEW Report Offsets U.S House Data

German stocks declined as worse- than-expected investor confidence data in the euro-area’s biggest economy offset a report showing new-home construction in the U.S. jumped more than forecast in March.

EON SE and RWE AG, Germany’s two largest utilities, slid at least 2.2 percent after the European Parliament rejected a proposed change to emission-trading rules. Symrise AG (SY1) slipped 0.8 percent as peer Givaudan SA reported first-quarter sales that missed analysts’ estimates.

The DAX Index (DAX) dropped 0.4 percent to 7,682.58 at the close of trading in Frankfurt. The benchmark has lost 4.7 percent since March 14 after concern mounted that a global economic recovery may sputter amid disappointing data from the U.S. and China and as gold had its biggest selloff since 1980. The broader HDAX Index retreated 0.5 percent today.

“The ZEW report doesn’t help,” Christian von Schuler, a trader at Hauck & Aufaeuser Privatbankiers KGaA in Hamburg, said in a phone interview, referring to the confidence report. “We had the commodities selloff, and the weak data from the U.S. and China. We are in the middle of a classical risk-off trade, people tend not to buy into an environment like this.”

In Germany, the ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 36.3 from a three-year high of 48.5 in March. Economists had forecast a drop to 41, according to the median of 40 estimates in a Bloomberg News survey.

U.S. Housing

In the U.S., new-home construction jumped more than estimated as multifamily projects climbed to the highest level in more than seven years.

Starts climbed 7 percent to a 1.04 million annual rate, the most since June 2008, following a revised 968,000 annual rate in February that was larger than previously reported, Commerce Department figures showed today in Washington. The median estimate of 80 economists surveyed by Bloomberg called for 930,000.

The volume of shares changing hands in companies on the benchmark was 6.6 percent lower than the average of the last 30 days, data compiled by Bloomberg showed.

“There is pressure in the short term, but commodity prices will stabilize, panic will leave the market and then you’ll have investors looking back at an environment of low interest rates and good corporate earnings,” said Herbert Perus, who helps oversee about $36 billion as head of equities at Raiffeisen Capital Management in Vienna. “All that bodes well for equities.”

Utilities Drop

EON and RWE (RWE) slid 5 percent to 13.74 euros, and 2.2 percent to 29.48 euros, respectively, after the European Parliament rejected a proposed change to emission-trading rules that would allow the supply of carbon permits to be curbed temporarily.

The European Union assembly voted against a plan to delay the issuing of some new allowances in the 2013-2020 phase of the EU’s emissions-trading system. The draft measure opposed by the 27-nation Parliament is meant to help bolster the price of EU emission permits after they fell to a record low in January.

Symrise, the world’s fourth-largest fragrance and flavors company, declined 0.8 percent to 30.37 euros. Givaudan, the biggest manufacturer, reported first-quarter sales that missed analysts’ estimates on weak demand for fine fragrances.

HeidelbergCement AG, the world’s third-largest cement maker, retreated 1.2 percent to 52.49 euros, as a measure of European construction stocks dropped.

ThyssenKrupp AG (TKA), Germany’s biggest steelmaker, rose for the first day in four as metal prices including gold, silver, copper, platinum and palladium advanced. The shares gained 1.6 percent to 13.86 euros.

To contact the reporters on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net

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

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