German stocks dropped for a second day as data showed American services industries expanded at a slower pace than economists had predicted and the U.S. government shutdown entered a third day.
Commerzbank AG, Germany’s second-biggest lender, slipped 2.1 percent. Gerresheimer AG slid 2 percent after Credit Suisse Group AG downgraded its rating on the stock. K+S AG, a maker of fertilizer ingredients, added 2.9 percent after a report that Russia is pushing for OAO Uralkali to resume cooperation on potash sales with its Belarusian rival.
The DAX Index declined 0.4 percent to 8,597.91 at the close of trading in Frankfurt, erasing a earlier gain of as much as 0.3 percent as the Institute for Supply Management’s U.S. non-manufacturing index fell more than forecast. The benchmark gauge surged 8 percent in the three months through September, the biggest quarterly advance in a year, as the Federal Reserve maintained its monthly bond purchases to support the U.S. economy. The HDAX Index dropped 0.3 percent today.
“The ISM number is weaker than expected, though it does not yet signal a shift in the trend of a slowly recovering U.S. economy,” Francois Savary, chief investment officer at Reyl & Cie. said by phone from Geneva. “The big uncertainty weighing on markets is still the debt and deficit issue, which would be bad for equities if there is no compromise in the next few days.”
The volume of shares changing hands in DAX-listed companies was 46 percent lower than the average of the past 30 trading sessions as many businesses closed for the German Unity Day holiday.
The U.S. non-manufacturing index fell to 54.4 in September from 58.6 the prior month, the Tempe, Arizona-based ISM said today. The median forecast in a Bloomberg survey called for a drop to 57. A number more than 50 indicates expansion.
Talks between President Barack Obama and congressional leaders yesterday failed to break the budget impasse as the U.S. government shutdown placed as many as 800,000 federal employees temporarily out of work.
A partial halt lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists in a Bloomberg survey, with the costs accelerating if the closure persists.
Congress also faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted by Oct. 17. The U.S. won’t have enough money to pay all of its bills at some point between Oct. 22 and Oct. 31 without action by Congress, according to the Congressional Budget Office.
“We all think the U.S. will reach a solution before we get to a default situation,” Richard Titherington, head of emerging markets at JPMorgan Asset Management in London, told Anna Edwards and Mark Barton on Bloomberg Television. “But it illustrates that these are uncertain times and the U.S. is no exception to that.”
Commerzbank lost 2.1 percent to 8.74 euros, following its biggest two-day gain in three weeks.
Gerresheimer declined 2 percent to 44.68 euros as Credit Suisse cut its recommendation on the stock to neutral from outperform. The brokerage lowered its full-year earnings estimates for the maker of pharmaceutical and health-care equipment through to 2015 and said the stock is trading close to its 46-euro price target.
K+S rose 2.9 percent to 19.15 euros, paring this year’s drop to 45 percent. Billionaire Suleiman Kerimov will probably sell his 22 percent stake in Uralkali, the world’s biggest potash producer, to a local investor, Dow Jones reported, citing unidentified people familiar with the discussions.
Russia told bidders for the stake that they should repair a rift with Belarus which ended a joint venture controlling 40 percent of global potash exports, according to the report.