German stocks declined the most in more than 12 months, after Federal Reserve Chairman Ben S. Bernanke said the central bank may begin reducing asset purchases this year as the world’s biggest economy improves.
Allianz SE lost the most in 11 months after catastrophe modeler AIR Worldwide said recent floods could cost insurers as much as 5.8 billion euros ($7.7 billion) in claims from Germany. Talanx AG dropped the most since its initial public offering after Berenberg Bank downgraded its rating on the shares. Commerzbank AG and Deutsche Bank AG, the country’s biggest lenders, each lost more than 1.5 percent.
The DAX Index slumped 3.3 percent to 7,928.48 at the close in Frankfurt. The equity benchmark is headed for a third week of losses, which would be the longest streak of weekly declines since April. The gauge is still on track for its fourth consecutive quarterly advance. The broader HDAX Index also fell 3.2 percent today.
“The FOMC statement was more hawkish than expected,” Michael Hartnett, New York-based chief investment strategist at Bank of America Corp.’s Merrill Lynch unit, wrote in a note. “Bernanke anticipates tapering to begin late this year and QE to end by the middle of next year. We remain of the belief that 2013 will be the high watermark of the liquidity era.”
The volume of shares changing hands in companies listed on the DAX was 35 percent higher than the average of the past 30 days, according to data compiled by Bloomberg. The VDAX Index, which gauges the cost of protecting against losses on the DAX, surged 13 percent to 20.19, the highest since September 2012.
The Fed will probably reduce the pace of stimulus measures later in 2013 and stop bond purchases around mid-2014 as long as the U.S. economy performs in line with the central bank’s projections, Bernanke told reporters yesterday in Washington after a two-day meeting of the Federal Open Market Committee.
The Fed said it will keep buying bonds at a pace of $85 billion a month, and repeated that it’s prepared to increase or reduce purchases depending on the outlook for employment and inflation.
More Americans than forecast filed applications for unemployment benefits last week. Jobless claims climbed by 18,000 to 354,000 in the week ended June 15 from a revised 336,000 the prior period, the Labor Department reported today in Washington. The median forecast of 46 economists surveyed by Bloomberg called for 340,000.
Sales of existing homes in the U.S. climbed 4.2 percent in May to a 5.18 million annualized rate, the National Association of Realtors said today. The median forecast of economists surveyed by Bloomberg had predicted a gain of 0.6 percent.
Germany’s services industry expanded at the fastest pace in four months in June, while the nation’s manufacturing industry continued to contract.
An index of the services industry based on a survey of purchasing managers rose to 51.3 this month from 49.7 in May, London-based Markit Economics said today. That beat the median estimate of 50 in a Bloomberg News survey of economists.
A manufacturing gauge fell to 48.7 in June from 49.4 in May, Markit said in the same report. Economists had projected a reading of 49.9. A reading above 50 signals expansion.
Chinese manufacturing slipped to 48.3 in the preliminary reading of a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit, less than the 49.1 median estimate of 15 economists in a Bloomberg News survey.
Allianz lost 4.8 percent to 109.55 euros. Insured losses in Germany will probably be at least 4 billion euros after the worst flooding in central Europe since 2002, AIR said late yesterday. Reinsurers Hannover Re and Munich Re fell 2.8 percent to 55.86 euros, and 3.3 percent to 139.70 euros, respectively.
Talanx dropped 4 percent to 24.53 euros after Berenberg cut its rating on the stock to hold from buy, saying the shares are fully valued. The stock has gained 31 percent since its IPO in October last year.
Commerzbank decreased 1.6 percent to 7.43 euros, while Deutsche Bank fell 3.7 percent to 33.14 euros, following European lenders lower.
Bayer AG sank 4.3 percent to 80.58 euros, its biggest slide in more than a year. The U.S. Food and Drug Administration said in a letter released late yesterday that a print advertisement for the company’s Xarelto drug, marketed with Johnson & Johnson, minimizes the risks of the blood-thinning treatment and makes a misleading claim about the need for dose adjustments.
Duerr AG lost 3.8 percent to 46.90 euros after the report showing manufacturing in China shrank more than economists had predicted. The maker of painting plants for the automobile industry got about 45 percent of its orders from China in the first quarter, according to a Bloomberg calculation.