German Stocks Decline From Two-Month High on Debt Crisis Concern

German stocks dropped, with the DAX Index falling from a two-month high, as a debt auction failed to assuage concern that the fiscal crisis will spread.

Deutsche Bank AG and Commerzbank AG followed declines in European banking shares. Nordex SE retreated 4.5 percent as competitor Vestas Wind Systems A/S cut its 2011 revenue forecast. Qiagen NV rose 3.2 percent as JPMorgan Chase & Co. raised its recommendation on the stock.

The DAX slid 0.9 percent to 6,111.55 at the close in Frankfurt, its first retreat in five days. The gauge fell last year, its first full-year loss since the 40 percent plunge in 2008, amid speculation that the euro area’s fiscal crisis will force at least one nation to default on its debt. The broader HDAX Index slipped 0.8 percent today.

“The whiff of optimism from yesterday’s session dissipated today, as the concerns over euro-zone debt came to the foreground again,” said Anita Paluch, a senior sales trader at Gekko Global Markets Ltd. in London. “The fears are especially well reflected in the performance of banking shares with exposure to euro-zone debt.”

Germany received bids for 5.14 billion euros ($6.7 billion) of 10-year bunds at an auction, more than its maximum sales target of 5 billion euros, the Bundesbank said in a statement today.

German stocks maintained their decline even as a report showed euro-area services and manufacturing output contracted in December less than was initially estimated. German output reached a four-month high.

Spain Considers Loans

Spain’s new government has considered applying for loans from the European Union’s rescue fund and the International Monetary Fund to finance the restructuring of the country’s financial industry, Expansion reported, citing unidentified people with knowledge of the matter.

In the U.S., a Commerce Department report showed that factory orders climbed 1.8 percent in November, falling short of the 2 percent median projection of 57 economists surveyed by Bloomberg News. Orders dropped 0.4 percent in October.

Deutsche Bank and Commerzbank, Germany’s biggest lenders, dropped 3.4 percent to 29.63 euros and 5 percent to 1.28 euros, respectively. Banking shares were the worst performers in the benchmark Stoxx Europe 600 Index today, declining 1.6 percent.

Italy’s largest lender, UniCredit SpA, said it will sell new shares for 43 percent less than their theoretical value excluding rights in a 7.5 billion-euro offer to strengthen its capital position. The sale starts on Jan. 9.

Nordex, a Hamburg, Germany-based wind-turbine maker, retreated 4.5 percent to 4.10 euros. Vestas, the biggest wind-turbine maker, cut its revenue and profit forecasts and said it plans to change its corporate structure.

Qiagen jumped 3.2 percent to 11.21 euros as JPMorgan upgraded the biotechnology company to “overweight” from “neutral.”

-- Editors: Will Hadfield, Srinivasan Sivabalan

Before it's here, it's on the Bloomberg Terminal. LEARN MORE