Volkswagen dropped 2.6 percent as a gauge of automotive-related companies was the worst performing industry group in the Stoxx Europe 600 Index. Kabel Deutschland Holding AG (KD8) jumped to its record price after Vodafone Group Plc approached the company about a takeover.
The benchmark DAX Index (DAX) fell 0.3 percent to 8,199.02 at 10:35 a.m. in Frankfurt. The gauge rose 5.5 percent in May and has rallied in all but one of the past 12 months as central banks around the world maintained their stimulus efforts. The broader HDAX Index lost 0.2 percent today.
“The big problem is that the markets have almost become addicted to monetary stimulus,” Daniel Kukalj, an equity analyst at Close Brothers Seydler Research in Frankfurt, wrote in a note.
Bundesbank President Jens Weidmann and ECB Executive Board member Joerg Asmussen testified on ECB’s Outright Monetary Transactions at the Federal Constitutional Court in Karlsruhe in hearings which continue today. While Weidmann argued that bond markets exert discipline on countries’ finances, Asmussen said the euro area faced break-up last year as investors began to price in an end to the currency.
“The risk of doing nothing would have been greater,” Asmussen told the court late yesterday. Weidmann, who voted against the plan last year, told the hearing that ECB measures may “blur the boundary between European monetary policy and the fiscal policy of individual nation states.”
German 10-year bunds erased a decline, leaving the yield little changed at 1.60 percent.
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