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German Stocks Drop as Bernanke Damps Stimulus Speculation

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Feb. 29 (Bloomberg) -- German stocks declined after Federal Reserve Chairman Ben S. Bernanke’s damped speculation of further quantitative easing to bolster the economy, paring the benchmark DAX Index’s best start to a year since 1988.

Daimler AG and Porsche SE paced declines. Hochtief AG retreated 5 percent after reporting a net loss and canceling its dividend. RWE AG, Germany’s second-biggest utility, rose 1.7 percent after Morgan Stanley said the company offered a “high and safe” dividend yield. Commerzbank AG, the second-largest German lender, advanced.

The DAX declined 0.5 percent to 6,856.08 at the close in Frankfurt. The gauge has still advanced 6.2 percent this month and 16 percent this year. The DAX posted its biggest January-February gain since the data started in 1988, outperforming every other national index in western Europe this year apart from Denmark. The broader HDAX Index fell 0.4 percent today.

“Adding liquidity has cut the risk of a shutdown of the euro area and helped stock markets,” said Mikkel Petersen, a senior equity adviser at Nordea Private Bank in Copenhagen, in a note to clients. “The result of today’s auctions will affect stock markets beyond today, and the more money allotted the better it’ll be for the stock market.”

The ECB said today it will lend 800 financial institutions 529.5 billion euros for 1,092 days. Economists had predicted an allotment of 470 billion euros, according to the median of 28 estimates in a Bloomberg News survey. In the ECB’s first three-year operation in December, 523 banks borrowed 489 billion euros.

Carmakers Slide

Bernanke told Congress gave no signal that the central bank is considering additional measures to spur the economy.

A gauge of carmakers posted the second-biggest decline of the 19 industry groups in the Stoxx Europe 600 Index. Daimler, the maker of Mercedes luxury sedans, slipped 1.4 percent to 45.40 euros. Porsche, the maker of the Porsche 911, declined 2.3 percent to 48.87 euros.

Hochtief, the German construction company controlled by ACS Actividades de Construccion y Servicios SA, slumped 5 percent to 52.41 euros, its biggest decline this month. The builder, which paid a 2-euro-a-share dividend for 2010, said it won’t propose a payout to shareholders for 2011 because it posted a 160 million-euro loss for the year. The company predicted that it will return to profit in 2012.

Q-Cells SE dropped 2.9 percent to 30.5 euro cents and SMA Solar Technology AG slipped 3.5 percent to 38.40 euros as a spokeswoman said German Chancellor Angela Merkel’s Cabinet has approved draft legislation cutting solar-power subsidies.

RWE added 1.7 percent to 34.20 euros after Exane BNP Paribas upgraded the company to “outperform” from “neutral.”

Commerzbank AG climbed 1.5 percent to 1.89 euros, for the second-largest advance in the DAX.

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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