DAX Index Retreats for Third Day; Deutsche Bank, Utilities Drop

German stocks fell for a third day as concern mounted that Europe’s debt crisis will spread further.

Deutsche Bank AG led declines in the benchmark DAX index, losing 4.2 percent, while E.ON AG and RWE AG followed European utilities lower. Baywa AG dropped 2.3 percent after reporting a net loss in the first quarter.

The DAX lost 0.8 percent to 5,908.26 in Frankfurt, the lowest close since March 15. The gauge slipped 0.3 percent in April, trimming its annual gain, amid speculation Greece’s debt crisis may spread further. The broader HDAX Index sank 0.9 percent today.

European Central Bank policy makers met in Lisbon today as investors looked to them to calm financial markets after the Greek bailout failed to assuage concerns about budget deficits from Portugal to Ireland. ECB President Jean-Claude Trichet resisted pressure from economists to consider buying government bonds to help relieve the fiscal crisis, telling reporters “we didn’t discuss the matter.” The ECB left interest rates at a record low of 1 percent for a 13th month today, as predicted by all 58 economists in a Bloomberg News survey.

“The market is panicking right now,” said Markus Steinbeis, Unterfoehring, Germany-based head of equity portfolio management at the German unit of Pioneer Investments, which oversees about $221 billion globally. “Investors are sure that buying bonds is the only solution, and the longer the ECB takes the more damage can happen.”

Austerity Measures

Greece’s parliament began debating austerity measures demanded by the European Union and International Monetary Fund as a condition of a 110 billion-euro ($140 billion) bailout as the nation mourns the three victims of Athens protests against the plan.

Deutsche Bank AG lost 4.2 percent to 47.67 euros. Germany’s biggest bank said today it will increase its stake in Huaxia Bank Co. to 19.99 percent from 17.12 percent by buying new shares from the Chinese lender for about 636 million euros ($811 million).

“Concern about the need for a possible capital increase could be behind the Deutsche Bank stock decline,” said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets, who recommends selling the stock. “The acquisition of the Huaxia stake could increase the likelihood of a share sale.”

Commerzbank AG fell 1.2 percent to 5.65 euros, even after reporting a better-than-estimated profit in the first-quarter, as banking shares tumbled across Europe.


E.ON lost 2.7 percent to 27.15 euros, while RWE dropped 1.7 percent to 60.24 euros. European utilities fell as much as 2.1 percent today, among the worst performers in the Stoxx Europe 600 Index, as GDF Suez SA had the outlook on its senior unsecured debt cut to “negative” from “stable” by Moody’s Investors Service.

Germany’s biggest steelmakers, ThyssenKrupp AG and Salzgitter AG, lost 1 percent to 23.06 euros and 1.7 percent to 56.71 euros, respectively. Aluminum, copper and zinc fell on the London Metal Exchange today.

Baywa AG dropped 2.3 percent to 28.25 euros as the agricultural products and building-materials maker said its first-quarter net loss widened to 20.3 million euros from 18 million euros.

K+S rose for the first time this week, gaining 1.4 percent to 41.52 euros. Europe’s largest potash producer was raised to “buy” from “reduce” at Equinet AG, which said “having roadshowed a number of farmers recently we are turning more positive on the sector outlook now.”

Deutz rose for the first time this week, climbing 5 percent to 4.23 euros. The engine maker was upgraded to “buy” from “neutral” at UBS AG. “The current market-related setback in the shares provides a buying opportunity,” wrote Sebastian Ubert, a Frankfurt-based analyst at UBS, in a report today.

-- With assistance from Aaron Kirchfeld in Frankfurt. Editor: Mike Gavin.

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