German stocks fell, with the benchmark DAX dropping to its lowest level in seven weeks, amid an unexpected decline in retail sales and uncertainty over potential U.S. military action against Syria.
Deutsche Lufthansa AG and Allianz SE led airlines and insurers lower, retreating at least 1.5 percent. Bayerische Motoren Werke AG slid 1.6 percent. Deutsche Bank AG rose after JPMorgan Chase & Co. boosted its recommendation on the shares. Gildemeister AG added 3.4 percent after Deutsche Bank upgraded the maker of cutting tools.
The DAX declined 1.1 percent to 8,103.15 at the close of trading in Frankfurt, the lowest since July 10. The measure has dropped 3.7 percent this week and 2.1 percent this month amid speculation the Federal Reserve will reduce stimulus and concern the U.S. and its allies will strike against Bashar al-Assad’s government. The broader HDAX Index fell 1 percent today.
“We’ll see a very defensive trading session because we’ve got the long weekend ahead with U.S. stock exchanges closed on Monday,” said Andreas Lipkow, a senior market strategist at Kliegel & Hafner AG in Berlin. “People are trying to figure out what will happen in Syria. Market participants noticed the retail numbers but will be focused more on the Syria theme.”
U.S. equity markets are closed on Sept. 2 for the Labor Day holiday.
German retail sales adjusted for inflation and seasonal swings dropped 1.4 percent in July from the month before, when they declined 0.8 percent, the Federal Statistics Office in Wiesbaden said today. Economists had predicted an increase of 0.6 percent, according to the median of 27 estimates in a Bloomberg survey.
In the U.S., consumer spending rose less than forecast in July. Purchases advanced 0.1 percent after a revised 0.6 percent increase the prior month, the Commerce Department said. The median forecast in a Bloomberg survey of economists called for a 0.3 percent gain.
U.K. Prime Minister David Cameron failed to gain parliamentary approval for a military response against Syria in a vote late yesterday. White House spokesman Josh Earnest said the administration still plans to publicly release “before the end of the week” an unclassified version of the intelligence assessment of the alleged chemical weapons attack in Syria.
Lufthansa, Europe’s second-largest carrier, slid 2 percent to 13.51 euros, for a weekly decline of 6.4 percent. A gauge of travel and leisure stocks fell 1.2 percent today and 2.8 percent on the week. Air Berlin Plc lost 2.7 percent to 1.80 euros.
BMW fell 1.6 percent to 71.29 euros. Daimler AG, the world’s third-largest maker of luxury vehicles, slipped 1.6 percent to 51.92 euros. Preferred shares of Volkswagen AG fell 1.2 percent to 172.10 euros. Continental AG, Europe’s second-largest auto-parts supplier, lost 1.9 percent to 114.20 euros. A gauge of automakers was the worst performer among the 19 industry groups on the Stoxx Europe 600 Index.
Allianz, Europe’s largest insurer, and Munich Re, the world’s biggest reinsurer, slid 1.6 percent to 108.40 euros and 1.5 percent to 137.90 euros, respectively. A gauge of insurers on the Stoxx 600 fell 1.6 percent.
Deutsche Bank rose 0.7 percent to 32.76 euros, paring an earlier gain of as much 2.4 percent, as JPMorgan upgraded the shares to overweight, meaning that investors should hold more of the shares than are represented in benchmark indexes, from neutral. Germany’s largest bank is the “cheapest” euro-region lender and concern about capital adequacy is “more than discounted,” JPMorgan said.
Gildemeister surged 3.4 percent to 16.84 euros. Deutsche Bank raised its recommendation on the shares to buy from hold, citing less risk and more synergy potential after the company announced a capital increase.
LEG Immobilien AG added 1 percent to 40.69 euros. Germany’s second-largest residential landlord by market value said first-half profit rose 11 percent after the company increased rental income and lowered financing costs.