May 14 (Bloomberg) -- German stocks fell, snapping three days of gains, as Greece moved closer to a possible exit from the euro currency union and German Chancellor Angela Merkel’s party lost a state election.
Infineon Technologies AG slid after the semiconductor maker said its chief executive officer was stepping down for health reasons. Deutsche Bank AG fell the most among lenders.
The DAX Index tumbled 1.9 percent to 6,451.97 at the close of trading in Frankfurt. The gauge added 0.3 percent last week even as Greek politicians struggled to form a government after inconclusive elections. The broader HDAX Index also dropped 1.9 percent today.
“Hopes are dwindling fast that parties in Greece will be able to agree on a coalition government in order to avoid having to call new elections in June,” said Markus Huber, head of German sales trading at ETX Capital in London. “New elections will not only be about accepting austerity measures in return for bailout money, but also indirectly will be a referendum on Greece staying in the euro.”
Greece’s political deadlock looked set to continue for a second week as President Karolos Papoulias failed to secure agreement on a unity government and avert new elections. Syriza, the left-wing group opposed to austerity measures, defied overtures to join the government yesterday.
Euro-area finance ministers met at 5 p.m. today in Brussels and may discuss the international bailout for Greece, as well as the situation in Spain, where the government last week made a fourth attempt to clean up the country’s banks.
The debate between growth and austerity will form the centerpiece of talks tomorrow between newly installed French President Francois Hollande and Merkel, who has championed an agenda of spending cuts.
Merkel’s party was defeated in Germany’s most populous state in an election that helped the Social Democrats tighten their grip on the country’s regional governments.
The SPD, the main opposition party nationally, increased its vote share in yesterday’s ballot in North Rhine-Westphalia. Merkel’s Christian Democratic Union fell to its worst score since World War II.
Euro-area industrial production unexpectedly declined in March, as lower output in countries from Spain to France offset gains in Germany. Production slipped 0.3 percent from February. Economists had forecast a gain of 0.4 percent. From a year earlier, production declined 2.2 percent.
Elsewhere, the People’s Bank of China said the amount of cash banks must set aside as reserves will fall 50 basis points effective May 18. This is the third time in six months that the central bank has cut reserve ratios to increase money supply for lending.
Infineon Technologies fell 3.4 percent to 6.67 euros. Europe’s second-largest semiconductor maker said Chief Executive Officer Peter Bauer will step down because of “severely worsening” osteoporosis and appointed a board member as successor.
The supervisory board accepted the 51-year-old executive’s resignation and named Reinhard Ploss, the management board member responsible for production, development, technology and personnel, as CEO from Oct. 1, Infineon said yesterday.
Deutsche Bank, Germany’s largest bank, fell 4.1 percent to 29.89 euros. Commerzbank AG dropped 2.7 percent to 1.52 euros.
A gauge of bank shares was among the worst performers of the 19 industry groups in the Stoxx Europe 600 Index.
Allianz SE, Europe’s biggest insurer, dropped 3.8 percent to 77.15 euros.
Preferred shares of Volkswagen, the world’s second-biggest carmaker, dropped 1.9 percent to 134.85 euros. Daimler AG, the third-biggest, slid 1.8 percent to 38.52 euros.
Bayerische Motoren Werke AG fell 1.7 percent to 66.44 euros.
MAN SE, the German truckmaker controlled by Volkswagen, slid 3.9 percent to 82.88 euros.
HeidelbergCement AG, the world’s third-largest maker of cement, fell 5.1 percent to 36.58 euros. Siemens AG dropped 1.7 percent to 67.10 euros.
ThyssenKrupp AG, Germany’s largest steelmaker, fell 3.8 percent to 15.77 euros. The stock was cut to neutral from buy at Citigroup Inc.
Bayer AG slid 2.9 percent to 51.51 euros. The German drugmaker said Morgan Stanley reduced its stake in the company to 3.74 percent.
Deutsche Lufthansa AG dropped 2.5 percent to 9.02 euros while Metro AG, Germany’s largest retailer, lost 3.1 percent to 22.96 euros.
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