German stocks dropped for a fourth day as concern over a slowdown in China spurred a selloff in automakers, and U.S. factory orders unexpectedly fell in April.
Volkswagen AG and Bayerische Motoren Werke AG both retreated at least 3 percent. BASF SE lost 1.1 percent after a report said it may make a major investment in emerging markets by 2015. Linde AG, the world’s second-largest maker of industrial gases, tumbled 4.3 percent.
The DAX Index fell 1.2 percent to 5,978.23 at the close of trading in Frankfurt. The gauge has fallen 16 percent since its high on March 16 amid growing concern that Greece will be forced to leave the euro area and Spanish banks will seek bailouts. The broader HDAX Index retreated 1.3 percent.
“We are seeing risk-off trading, in a continuation from Friday,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich. “There is poor sentiment towards China which is why some luxury stocks such as the automobile sector have been falling today.”
China’s non-manufacturing purchasing managers’ index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement yesterday in Beijing. That’s the lowest reading since March 2011.
The report adds to evidence that the world’s second-biggest economy is weakening as Europe’s debt crisis crimps demand and government curbs on the property market feed through to more industries.
JPMorgan Chase & Co. last week cut its estimate for China’s growth for the second time within a month. It now expects the world’s second-largest economy to expand 7.7 percent in 2012 against a previous projection of 8 percent.
Orders to U.S. factories unexpectedly fell in April, pointing to a deceleration in manufacturing as the global economy cools. Bookings dropped 0.6 percent after a revised 2.1 percent decrease in March, the first back-to-back drops in more than three years, according to a Commerce Department report Economists had projected a 0.2 percent gain, according to the median forecast in a Bloomberg News survey.
Spanish Prime Minister Mariano Rajoy on June 2 added his voice to calls for a more robust “banking union” in Europe, lending his support for a centralized system to re-capitalize lenders.
German Chancellor Angela Merkel said the same day that “under no circumstances” will she accept euro bonds.
Volkswagen, Europe’s biggest automaker, dropped 3.2 percent to 119.75 euros. BMW, the world’s largest luxury carmaker, slid 3.2 percent to 56.85 euros. Daimler AG fell 1.9 percent to 34.85 euros.
A gauge of automakers was the worst performer of the 19 industry groups in the Stoxx Europe 600 Index.
BASF declined 1.1 percent to 53.48 euros. The world’s biggest chemical company may invest as much as 6 billion euros ($7.45 billion) in emerging markets by 2015 amid economic uncertainty in Europe, Tagesspiegel reported, citing an interview with board member Michael Heinz.
Linde retreated 4.3 percent to 116.05 euros.
HeidelbergCement, Europe’s third-largest cement maker, fell 3 percent to 33.08.
Deutsche Bank AG, Germany’s largest lender, rose 1.1 percent to 27.44 euros.