German stocks declined, snapping two days of gains, as the Bank of Japan kept its policy unchanged and a federal court began hearings on the European Central Bank’s bond-buying plan.
Deutsche Bank AG and Commerzbank AG, Germany’s two largest lenders, each fell at least 1 percent. Daimler AG and Bayerische Motoren Werke AG led automakers lower. Infineon Technologies AG added 3.3 percent after Citigroup Inc. upgraded the stock.
The DAX Index slid 1 percent to 8,222.46 at the close in Frankfurt, after earlier falling as much as 2 percent. German stocks rose 0.6 percent yesterday as data showed the Japanese economy grew more than initially forecast. The broader HDAX Index also fell 1 percent today.
“There’s a mixture of profit taking and some uncertainties from the German court case and central bank policies in general,” said Andreas Lipkow, a senior market strategist at Kliegel & Hafner AG in Berlin. “Nobody knows really which way it will go in the next couple of days.”
The German VDAX Index, which measures the cost of buying protection against swings on the DAX, rose 7.7 percent to 17.74, the biggest increase in a week. The volume of shares changing hands in DAX-listed companies was 3.7 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
The BOJ today refrained from expanding its tools to rekindle inflation and stoke growth, sticking with an April pledge to increase the monetary base by 60 trillion yen ($611 billion) to 70 trillion yen a year.
Germany’s top court began a two-day hearing today to address the ECB’s Outright Monetary Transactions program and the European Stability Mechanism.
The Federal Constitutional Court in Karlsruhe is reviewing the OMT, which was introduced last year as concerns peaked that the euro region would break apart, after plaintiffs including a lawmaker allied to Chancellor Angela Merkel brought a case against it. The as-yet-unused OMT foresees potentially unlimited purchases of bonds of debt-stricken countries that sign up to adjustment programs.
The court last year allowed Germany to ratify the 500 billion-euro ($663 billion) ESM bailout facility and the EU fiscal pact, while ruling the measures must include provisions that the country won’t be forced to assume higher liabilities without its consent. The September ruling was preliminary and didn’t cover the OMT bond program.
Deutsche Bank dropped 2 percent to 35.54 euros and Commerzbank lost 1.4 percent to 7.52 euros, as financial shares in Europe slid.
Daimler, the world’s third-biggest maker of luxury vehicles, fell 1.4 percent to 48.18 euros as European automakers declined. BMW, the biggest manufacturer of luxury cars, retreated 1.5 percent to 71.41 euros.
Allianz SE, Europe’s largest insurer, slid 2.3 percent to 114.10 euros. A gauge of insurers on the Stoxx Europe 600 Index declined 1.7 percent.
Takkt AG, an office equipment provider majority-owned by Franz Haniel & Cie GmbH, tumbled 9.5 percent to 11.61 euros, the biggest decline in 13 months. Haniel said after markets closed yesterday that it plans to reduce its stake to as low as 50.01 percent from 70.44 percent.
Infineon, Europe’s second-biggest chipmaker, advanced 3.3 percent to 6.67 euros. Citigroup raised its recommendation on the shares to buy from neutral, citing signs of a broad, consistent improvement in European semiconductor demand.
Rheinmetall AG, the maker of armored military vehicles and artillery systems, added 2.2 percent to 39.13 euros. HSBC Holdings Plc upgraded the stock to overweight, similar to a buy rating, from neutral. HSBC said the company’s restructuring should generate attractive operating profit from 2015.