Germany Stocks Fall, Extending Biggest Quarterly Drop Since 2002

German stocks fell, extending the benchmark DAX Index’s biggest quarterly drop in nine years, as a decline in the nation’s retail sales increased concern the global economy is slowing.

Metro AG and Adidas AG retreated after German retail sales declined the most in more than four years in August. Bayerische Motoren Werke AG and Daimler AG dropped as a gauge of Chinese manufacturing shrank for a third month. Deutsche Bank AG slid following a report in Handelsblatt that the company may cut its profit goal for this year.

The DAX fell 2.4 percent to 5,502.02 at the 5:30 p.m. close in Frankfurt. The gauge slumped 25 percent this quarter, the most since 2002, amid concern global growth is stumbling and policy makers are struggling to contain the European debt crisis. The broader HDAX Index lost 2.6 percent today.

“Consumer sentiment is coming down rapidly,” Heino Ruland, an economist at Ruland Research GmbH in Eppstein, Germany, wrote in a report today. “Recent public talk about a looming recession in the euro area and the U.S. has lifted unemployment expectations considerably. Fears over the state of the global economy are beginning to take its toll.”

The DAX today erased the 1.1 percent gain it posted yesterday, when lawmakers backed an extended euro-region bailout fund. The Stoxx Europe 600 Index has tumbled 22 percent since February as concern grows that Greece will default and the cost of borrowing for countries from Spain to Italy surges.

Debt Crisis

While a resolution of Europe’s debt crisis “would remove uncertainty, it would not make us fully confident that a return to stable and strong growth can be achieved,” Fredrik Nerbrand, global head of asset allocation at HSBC Holdings Plc in London, wrote in a report. “The negative feedback loop should amplify the deteriorating economic cycle, causing risk premiums to rise. We believe markets will be held hostage by growth concerns for the rest of this year.”

Metro, Germany’s largest retailer, fell 4.3 percent to 31.93 euros, its first decline in five days. Adidas, the world’s second-largest sporting-goods maker, dropped 1 percent to 45.78 euros.

Retail sales in Germany, adjusted for inflation and seasonal swings, slumped 2.9 percent last month from July, when they rose 0.3 percent, the Federal Statistics Office in Wiesbaden said today. That’s the biggest drop since May 2007. Economists forecast a 0.5 percent decline, according to the median of 18 estimates in a Bloomberg News survey.

BMW, Daimler

BMW, maker of the X3 sport-utility vehicle, lost 5.3 percent to 49.97 euros. Daimler, maker of the Mercedes-Benz cars, lost 3.4 percent to 33.63 euros. Hugo Boss AG, which sells clothing under the brands Boss, Hugo, and Baldessarini, tumbled 12 percent to 60.28 euros.

A gauge of Chinese manufacturing contracted for a third month in September, the longest contraction since 2009, as measures of new orders and export demand declined. All three German companies sell to the Asian nation.

The reading of 49.9 for the purchasing managers’ index, released by HSBC Holdings Plc and Markit Economics today, was unchanged from August and compared with a preliminary 49.4 figure published last week. The gauge was below 50, the level that separates expansion from contraction, for eight months through March 2009.

Deutsche Bank

Deutsche Bank fell 6.8 percent to 26.32 euros, the worst performance in the DAX. The country’s biggest bank may lower its target for achieving a record 10 billion euros ($13.6 billion) in profit this year, Handelsblatt reported, citing unidentified people close to the management board.

Chief Executive Officer Josef Ackermann is due to provide an assessment of the current market situation on Oct. 4 at a Bank of America Merrill Lynch conference in London, the newspaper said. Christian Streckert, a spokesman for the bank, declined to comment on “market speculation,” when reached by phone today by Bloomberg News.

Speaking at an event in Zurich today, Ackermann said the financial industry is facing a “tectonic shift” and share prices of banks reflect mistrust and recession trends.

K+S AG, Europe’s largest potash producer and a maker of agriculture fertilizers, declined 5 percent to 39.58 euros. A U.S. government report showed bigger wheat inventories in the country than forecast, signaling importers and millers may be reducing purchases.

Inventories totaled 2.15 billion bushels on Sept. 1, more than the 2.071 billion forecast by analysts in a Bloomberg News survey, the U.S. Department of Agriculture said today. In a separate report, the USDA cut its estimate of domestic output by 3.3 percent. Yesterday, the agency said U.S. wheat exports slid 37 percent in the week ended Sept. 22, from a week earlier.

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