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German Stocks Extend Three-Week Low Amid U.S. Deadlock

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Oct. 9 (Bloomberg) -- German stocks fell for a third day, extending a three-week low, as the deadlock over the U.S. budget and borrowing limit continued.

Celesio AG fell from its highest price in more than three years as Commerzbank AG lowered its rating on the drug wholesaler. EON SE rose to its highest price since May as a gauge of European utilities rose.

The DAX Index lost 0.5 percent to 8,516.69 at the close of trading in Frankfurt. The equity benchmark dropped for the past two weeks as a standoff between U.S. lawmakers led to the first shutdown of the federal government in 17 years. The broader HDAX Index decreased 0.6 percent today.

“Even if there is some form of temporary budget deal and we see a relief rally, it just kicks the can down the road,” said James Butterfill, head of global equity strategy at Coutts & Co. in London, in a telephone interview. “We won’t be any closer to a proper resolution.”

The U.S. government began a partial shutdown on Oct. 1 after Congress failed to pass an emergency budget for the new financial year. The deadlock has coincided with the need to raise the federal government’s borrowing authority before Oct. 17, when the Treasury Department predicts it will hit the $16.7 trillion debt ceiling.

Senate Democrats plan to hold a test vote before the end of this week on increasing the debt limit for a year. The measure will need support from at least six Republicans.

Debt Limit

President Barack Obama said yesterday that he would discuss policies, including his health-care law, if lawmakers expanded the borrowing authority and reopened the government. A House Republican leadership aide, who asked not to be identified, said party leaders won’t agree to raise the debt ceiling unless the measure contains their policy priorities.

Separately, Obama will nominate Janet Yellen as chairman of the Federal Reserve at 3 p.m. Washington time today. She will succeed Ben S. Bernanke, whose term expires on Jan. 31, according to a White House official. Yellen supported the central bank’s bond-buying programs and backed the decision to commit the central bank to goals on inflation and unemployment.

The Fed will release the minutes of its September 17-18 meeting after the close of European trading today. The central bank refrained from reducing its $85 billion of monthly asset purchases at the meeting. Most economists surveyed by Bloomberg had predicted a cut.

Celesio, ThyssenKrupp

Celesio dropped 2.6 percent to 19.96 euros. Commerzbank downgraded the stock to hold from buy, citing the risk that Celesio’s majority shareholder, Franz Haniel & Cie GmbH, may fail to allow McKesson Corp. to gain control of the business. The German drug wholesaler rallied 20 percent yesterday as Dow Jones reported that McKesson has started talks with Franz Haniel about acquiring the company.

ThyssenKrupp AG retreated 1.1 percent to 18.21 euros as Platow Brief reported that Germany’s largest steelmaker will soon start a capital raising of about 1 billion euros ($1.4 billion). The publication cited unidentified bankers.

EON rose 1.2 percent to 14.03 euros as a gauge of European utilities jumped to its highest level in more than a year. The stock has fallen 0.4 percent in 2013, while the Stoxx 600 Utilities Index has advanced 6.7 percent.

Tom Tailor Holding AG jumped 8 percent to 17.04 euros, its biggest rally since March, after the clothing retailer said sales jumped 6.2 percent in the third quarter. The Bonita brand posted increased like-for-like sales for the first time since its acquisition, according to a statement. The company publishes its final results for the period on Nov. 7.

Commerzbank added 1 percent to 8.84 euros. Germany’s financial regulator said it has no plans to investigate possible currency manipulation at the country’s banks. The European Commission said on Oct. 7 that it would investigate potential fixing of foreign-exchange rates in the region.

The volume of shares changing hands in DAX-listed companies was 16 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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