German stocks fell the most in a week as the financial regulator, Bafin, was said to ask Deutsche Bank AG to simulate splitting its business, outweighing a report that showed investor confidence rebounded this month.
Deutsche Bank dropped 1.9 percent, paring an earlier plunge of 4 percent. RWE AG fell 2.9 percent after Macquarie Group Ltd. lowered its recommendation for Germany’s second-largest utility.
The DAX Index declined 0.7 percent to 7,696.21 at the close of trading in Frankfurt, after earlier slumping as much as 1.5 percent. The volume of shares changing hands in companies listed on the equity benchmark was 17 percent greater than the average of the last 30 days, according to data compiled by Bloomberg. The broader HDAX Index retreated 0.6 percent today.
“We are hearing some chatter that is weighing on the market,” said Stephane Ekolo, chief European strategist at Market Securities in London in written comments. “Deutsche Bank may guide lower. These rumors, coupled with the fact Bafin has asked two banks to simulate a split-bank model, are taking their toll on the markets.”
Deutsche Bank lost 1.9 percent to 35.94 euros, after earlier sinking as much as 4 percent. Commerzbank AG, Germany’s second-largest bank, retreated 2.5 percent to 1.65 euros.
Bafin asked Deutsche Bank to simulate a split of its business, according to a person with knowledge of the situation who asked not to be identified because the matter is private. A group led by Bank of Finland Governor Erkki Liikanen has called for banks to move their trading activities into separately capitalized units. Boersen Zeitung earlier reported that Bafin requested Deutsche Bank simulate a split based on the Liikanen group’s proposals. The newspaper cited unidentified people.
Separately, Christian Streckert, a spokesman at Deutsche Bank, declined to comment on the rumors about the earnings outlook for Germany’s largest lender.
Stocks earlier pared their decline after a report showed German investor confidence increased to its highest level in 2 1/2 years in January. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 31.5 from 6.9 in December. Economists had forecast the measure would rise to 12, according to the median of 39 estimates in a Bloomberg News survey.
RWE lost 2.9 percent to 28.47 euros. Macquarie cut its recommendation on the stock to neutral from outperform, meaning that investors should not buy more of the shares.
“Without radical overhaul, we conclude the German power system is structurally broken,” the analysts wrote in a note.
European Aeronautic, Defence & Space Co. climbed 2.3 percent to 34.97 euros. The company will meet or beat earnings and sales goals for its four main units when it reports financial results for 2012, Chief Executive Officer Tom Enders said. The CEO told journalists that the Airbus SAS commercial aircraft unit, Eurocopter division, Astrium space operation and Cassidian defense business all contributed toward the targets.
Wirecard AG slipped 4.3 percent to 17.26 euros. The provider of software and systems for online payments was cut to hold from buy at Berenberg Bank AG. The analysts cited the stock’s strong performance last year. Wirecard soared 50 percent in 2012.
Drillisch AG gained 3.7 percent to 12.30 euros after the German provider of telephone services said it plans to increase its dividend for 2012.