German stocks fell for a second day as Federal Reserve officials warned about the speed of the U.S. recovery and concern about the euro-area debt crisis increased.
Metro AG led falling shares in the benchmark DAX Index, dropping 4.1 percent. K+S AG fell as BofA Merrill Lynch Global Research removed the shares from its “Europe 1” list. ThyssenKrupp AG and Salzgitter AG declined as metal prices fell. Beiersdorf AG gained as UBS AG said it sees “limited downside” for the stock.
The DAX lost 0.5 percent to 6,939.82 at the 5:30 p.m. close in Frankfurt. The gauge surged 16 percent last year as corporate profits rose, central banks implemented actions aimed at boosting the economic recovery and the European Union bailed out Greece and Ireland. The broader HDAX Index fell 0.6 percent today.
“We should expect further problems in terms of sovereign risk in coming months,” said Stefano Girola, who helps oversee about $4 billion at Banca Albertini Syz & Co. in Milan. “The economic growth is out there both in the U.S. and Europe but could slow down already next spring.”
The additional yield investors demand to hold 10-year Greek government bonds instead of benchmark German bunds widened to a record today. The difference in yield, or spread, reached 974 basis points, according to data compiled by Bloomberg.
Harvard University professor Kenneth Rogoff said Greece may yet default on its debts even after the euro member received a bailout from the European Union and the International Monetary Fund to help keep it afloat.
“While the economic outlook was seen as improving, members generally felt that the change in the outlook was not sufficient to warrant any adjustments to the asset-purchase program, and some noted that more time was needed to accumulate information on the economy before considering any adjustment,” the Fed said in minutes of its Dec. 14 policy meeting, released yesterday.
German stocks pared some losses after a report showed U.S. companies boosted payrolls last month by the most since at least 2001, indicating a stronger labor-market recovery at the end of last year. Another report showed that service industries expanded in December at the fastest pace since May 2006.
Metro retreated 4.1 percent to 53.60 euros as shares of the retailer fell below their 20- and 50-day moving averages.
Separately, Commerzbank AG, which has a “add” rating on the stock but recommend investors “profit-taking ahead of the release,” said in a note today that “Metro is likely to deliver disappointing sales for all divisions.” The company will publish fourth-quarter and 2010 sales on Jan. 11.
HeidelbergCement AG, the world’s third-largest maker of cement and concrete, lost 3.4 percent to 45.64 euros as construction stocks dropped across Europe. Hochtief AG plummeted 3.4 percent to 61.75 euros after WestLB AG downgraded the builder to “add” from “buy.”
K+S dropped 1.5 percent to 56.12 euros as BofA Merrill Lynch removed the maker of household, industrial and commercial salt products and fertilizers from its “Europe 1” list.
ThyssenKrupp and Salzgitter, Germany’s largest steelmakers, dropped for the first time this week, losing 3 percent to 30.60 euros and 2.8 percent to 57.06 euros, respectively as copper, nickel, zinc and aluminum all slid on the London Metal Exchange.
Beiersdorf advanced 2.7 percent to 42.88 euros, rising for a second day. UBS, which has a “neutral” rating on the maker of Nivea skin cream, said in a note that “consensus estimates now reflect the impact of the new strategy on sales and earnings” and “Nivea’s brand equity remains strong,” while “speculation about potential changes in Beiersdorf’s long-term ownership remains an important part of the debate.”
Daimler AG soared 3.1 percent to 53.60 euros. The world’s second-biggest maker of luxury cars said after the U.S. market close yesterday that December U.S. sales at its Mercedes-Benz unit were up 0.3 percent from a year earlier. The U.S. vehicle sales for 2010 rose 18 percent.
Kontron AG surged 7.9 percent to 8.74 euros as DZ Bank AG and Berenberg Bank both increased their price projections for the maker of miniature computers for slot machines and drone aircraft to 11.50 euros.
DZ Bank, which reiterated a “buy” rating, said in a note that “in the coming two years Kontron should achieve a substantial increase in earnings due to elimination of costs, completion of restructurings, falling material costs, and steeply rising sales growth.”