German stocks plunged, sending the DAX Index down the most in five months, amid concern Greece’s debt crisis will spread to other countries in Europe.
Deutsche Bank AG sank 5 percent after its asset and wealth management unit reported an unexpected loss. ThyssenKrupp AG and Salzgitter AG, Germany’s biggest steelmakers, followed metal prices lower. Software AG tumbled the most since January after software-license sales missed analysts’ estimates.
The benchmark DAX lost 2.7 percent to 6,159.51 in Frankfurt, the biggest drop since November. The measure has still climbed 3.4 percent in 2010 amid signs the economic recovery is strengthening. The broader HDAX Index fell 2.8 percent today.
“Major sovereign problems as far as the eye can see have started to materialize in the euro zone,” Deutsche Bank’s Frankfurt-based strategists Ingo Schmitz and Andreas Neubauer wrote in a report dated yesterday. “Equities seem to have decoupled from these problems to a large degree for now, but if the problems come back into focus they could trigger a significant DAX decline in the next months.”
S&P Ratings Services lowered its ratings on Greek debt to junk, while Portugal’s was cut two steps as contagion from Greece’s debt crisis spreads through the euro region. Credit-default swaps on Greek debt jumped 104 basis points to a record 814 basis points.
German Chancellor Angela Merkel hit the campaign trail with a warning to Greece and the rest of the euro region that a bailout of the debt-stricken nation isn’t a done deal.
“I’ve said for weeks that Greece must do its homework first,” Merkel said late yesterday, drawing applause from an audience in the town of Soest in North Rhine-Westphalia, where state elections are due on May 9. She said that while Germany is prepared to release funds for debt-stricken Greece, “first I want to see the program.”
Deutsche Bank, Germany’s largest lender, lost 5 percent to 52.59 euros, erasing yesterday’s 2.9 percent gain. The bank’s asset and wealth management unit had a pretax loss of 5 million euros ($6.7 million) on costs tied to the integration of Sal. Oppenheim Group and retirement expenses. That missed analysts’ estimate for a 111 million-euro profit.
Separately, Deutsche Bank said it received subpoenas and requests for information from certain regulators and government entities. Only one of six lawsuits related to asset-backed securities is new, Deutsche Bank spokesman Ronald Weichert said.
Deutsche Postbank AG slumped 5.1 percent to 25.87 euros as Deutsche Bank Chief Financial Officer Stefan Krause said the lender is in “no hurry” to increase its stake in Postbank.
Commerzbank AG lost 2.8 percent to 6.10 euros. The U.K. Financial Services Authority fined the bank’s London unit 595,000 pounds ($914,000) for failures to properly report transactions over a two-year period.
ThyssenKrupp lost 2.1 percent to 24.80 euros, while competitor Salzgitter retreated 2.4 percent to 62.88 euros. Aluminum, copper, lead, nickel, tin and zinc all fell on the London Metal Exchange today.
HeidelbergCement AG slumped 5.7 percent to 46 euros, the biggest drop in three months. The world’s third-largest maker of cement dropped as competitor Cemex SAB trimmed its forecast for shipments this year because of weaker Mexican demand.
Software AG sank 6.9 percent to 88.66 euros as Germany’s second-largest software maker said it sold fewer licenses than analysts estimated in the first quarter.
“License sales came in lower than expected due to regional weakness in sales” said Thomas Becker, an analyst at Commerzbank AG in Frankfurt, who predicted they would reach 64 million euros.
Daimler AG, the world’s second-biggest maker of luxury cars, slid 3.9 percent to 37.93 euros, even after raising its earnings forecast for the year. Before today, the shares had gained 8.7 percent since April 19, when the company boosted the outlook for its Mercedes Cars and heavy truck units.
Preferred shares of Volkswagen AG, Europe’s largest carmaker, dropped 3.4 percent to 71.04 euros.
Infineon Technologies AG, Europe’s second-biggest chipmaker, slid 5.1 percent to 5.26 euros as AlphaValue downgraded the stock to “reduce” from “add.”