German stocks dropped to a three-week low as Deutsche Bank AG and Allianz SE shares declined, while Italian bond yields rose after a debt auction.
Deutsche Bank retreated 2.6 percent, posting the biggest slide on the DAX Index, as Standard & Poor’s said it may cut the lender’s credit rating. Allianz slipped 2.3 percent after saying it will buy Turkey’s Yapi Kredi Sigorta AS. Commerzbank AG decreased 1.9 percent.
The DAX lost 1.2 percent to 7,789.09 at the close of trading in Frankfurt, its lowest level since March 4. The equity benchmark has dropped 1.6 percent so far this week, paring its gain in March to 0.6 percent. The gauge has added 2.3 percent in 2013. The broader HDAX Index also fell 1.2 percent today.
“We’re not out of the woods,” Robert Doll, chief equity strategist at Nuveen Asset Management LLC, said in an interview with Tom Keene on Bloomberg Television. “Europe has put its problems on the backburner with some global growth, lower interest rates and all kinds of fancy programs which I call band-aids. It took years for Europe to get into this mess, it will take years to get out.”
Italy’s 10-year government-bond yields jumped 20 basis points to 4.77 percent after the Treasury in Rome sold debt due in 2018 and 2023. The Democratic Party leader Pier Luigi Bersani, who won the most seats in the lower house of parliament in last month’s election, failed to obtain the support of the Five Star Movement to form a governing coalition.
In Germany, a report from GfK SE forecast that consumer confidence will stabilize in April. The Nuremberg, Germany-based market researcher predicted that its consumer-sentiment index, based on a survey of about 2,000 people, will remain at 5.9 next month, the level it reached in March. That matched the median estimate in a Bloomberg News survey of 30 economists.
In the U.S., a report showed that fewer Americans signed contracts to purchase previously owned homes in February. The index of pending property sales fell 0.4 percent, after rising a revised 3.8 percent in January, the National Association of Realtors reported today in Washington. The median forecast in a Bloomberg survey had called for sales to drop 0.3 percent.
Deutsche Bank slid 2.6 percent to 30.49 euros. S&P placed the lender’s A+ long-term rating on CreditWatch negative, according to a statement. Germany’s largest lender said last week that it has set aside additional money to cover costs linked to U.S. mortgage lawsuits and investigations by regulators. The bank lowered its reported profit for 2012 by about 400 million euros ($511 million) to 291 million euros on March 20.
Allianz slipped 2.3 percent to 105.80 euros after Europe’s biggest insurer agreed to buy Yapi Kredi Sigorta for 684 million euros. The German company will purchase Yapi & Kredi Bankasi AS’s 93.9 percent stake in the business, and conduct a mandatory takeover offer for the remaining shares shortly after completing the transaction.
Commerzbank dropped 1.9 percent to 1.14 euros. Shares in Germany’s second-biggest bank have declined 20 percent so far in March, their biggest slump since November 2011.
SMA Solar Technology AG decreased 2.9 percent to 19.78 euros. Germany’s biggest solar company said it may make a loss in 2013.