German Stocks Fall Most in Six Months; Commerzbank Drops

German stocks fell the most in more than six months amid signs of political turmoil in Spain and Italy, and as Commerzbank AG posted a quarterly loss.

Commerzbank sank 5.9 percent. K+S AG, Europe’s biggest potash maker, retreated 2.4 percent as Barclays Plc cut its rating of the stock. Deutsche Post AG lost 3.1 percent as HSBC Holdings Plc downgraded the shares. Linde AG slid after Credit Suisse Group AG cut its recommendation on the industrial-gas maker to underperform.

The DAX Index slipped 2.5 percent to 7,638.23 at the close of trading in Frankfurt, its biggest drop since July 23. The gauge has still risen 0.3 percent this year as U.S. lawmakers agreed on a budget preventing spending cuts and tax increases that had threatened to push the world’s biggest economy into recession. The broader HDAX Index declined 2.3 percent today.

“The trigger today was the situation and sentiment for Italy and Spain went down dramatically on speculation about the Italian election and corruption in Spain,” said Christian Schmidt, a market analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt. “We also got bad figures from Commerzbank. That all together was like a thunderstorm. Something was in the air and it exploded.”

Spain’s 10-year yields climbed to the highest since mid-December as Premier Mariano Rajoy denied corruption allegations. Records published in El Pais, Spain’s biggest newspaper, show Rajoy allegedly received 25,200 euros ($34,100) each year for 11 years from a secret fund set up by former People’s Party Treasurer Luis Barcenas. Rajoy said he never got illegal payments.

Italian Election

In Italy, Silvio Berlusconi has gained on front-runner Pier Luigi Bersani, ahead of the Feb. 24-25 general election. The surge by Italy’s former premier, who was pressured to resign in 2011 amid soaring bond yields, threatens Bersani’s ability to win a majority even if he remains ahead in the polls.

The volume of shares changing hands on the DAX was 57 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

Stocks in the world’s developed nations had posted the best start to a year in two decades, as individual investors pumped record deposits into mutual funds, U.S. profits increased for an 11th quarter, central banks kept interest rates at record lows and growth from Europe to China improved. The MSCI World Index of stocks in 24 markets rose 5 percent in January, the most since 1994.

Commerzbank Loss

Commerzbank slid 9.5 cents to 1.52 euros, dropping for a fifth day. Germany’s second-largest lender posted a fourth-quarter loss after charges relating to the sale of Bank Forum and a tax asset writedown. The loss of 720 million euros compares with a profit of 320 million euros in the year-earlier period, the bank said.

Deutsche Bank AG, the country’s largest lender, declined 3.4 percent to 37.23 euros.

K+S retreated 80 cents to 32.61 euros as Barclays downgraded the stock to equal weight, similar to a hold rating, from overweight, saying potash prices may fall this year.

Deutsche Post, Europe’s largest postal service, fell 54.5 cents to 16.92 euros. HSBC cut the shares to underweight from neutral, citing risks to 2013 European express pricing.

Linde slid 2.3 percent to 132.40 euros. Credit Suisse cut its rating on the shares to underperform from neutral, saying the acquisition of Lincare Holdings Inc. “faces ongoing government pricing and earnings risk.”

Aurubis AG sank 3.8 percent to 55.04 euros. The operator of copper-smelting facilities posted first-quarter IFRS earnings before taxes of 13 million euros versus 213 million euros a year earlier.

Fielmann AG declined 2.5 percent to 73.35 euros. Deutsche Bank cut its rating on Europe’s largest chain of optical stores to sell, citing online competition and cost pressures.

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