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Germany’s Stocks Decline as Automakers Retreat

Jan. 29 (Bloomberg) -- German stocks fell, paring earlier gains, before the Federal Reserve concludes a two-day meeting and as decisions to increase interest rates in Turkey and South Africa failed to prevent a rout in emerging-market currencies.

Volkswagen AG and Daimler AG each dropped at least 1.7 percent with automakers posting the second-biggest drop among 19 industry groups in the Stoxx Europe 600 Index. Merck KGaA dropped 1.7 percent for a fifth day of losses. Commerzbank AG rose 1 percent for the biggest gain on the benchmark DAX Index.

The DAX slipped 0.8 percent to 9,336.73 at the close of trading in Frankfurt. The gauge jumped as much as 1.4 percent earlier today, after Turkey’s central bank raised its key interest rates. It then pared gains as emerging-market currencies fell for the 12th time in 13 days. The broader HDAX Index also lost 0.8 percent today.

“Emerging markets and their increasingly unsuccessful attempts to prop up their currencies have spread mayhem to the major markets ahead of tonight’s FOMC tapering decision,” Alastair McCaig, a market analyst at IG in London, wrote in note, referring to the Federal Open Market Committee. “As well-placed as the U.S. might be to handle these changes to the current stimulus, it is becoming apparent that all too many other countries are not yet ready to be weaned from the teat.”

The Fed will announce its decision on slowing the pace of monthly bond purchases at the end of its final policy meeting under Chairman Ben S. Bernanke, after European markets close today. Bernanke leaves his post on Jan. 31.

The central bank will probably reduce its monthly bond purchases in $10 billion increments over the next six meetings before announcing an end to the program no later than December, according to a Bloomberg survey this month.

Consumer Sentiment

GfK AG said its consumer-sentiment index will rise to 8.2 in February. That would be the highest level since 2007. The gauge climbed to 7.7 in January.

The volume of shares changing hands in companies listed on the DAX was 49 percent higher today than the average of the past 30 days, according to data compiled by Bloomberg.

Volkswagen lost 2 percent to 191.70 euros and Daimler retreated 1.7 percent to 61.79 euros. European carmakers dropped 1.2 percent as a group after Italy’s Fiat SpA forecast 2014 profit that trailed analysts’ estimates.

Merck declined 1.7 percent to 116.70 euros. The stock has tumbled 14 percent since Jan. 22.

Commerzbank added 1 percent to 13.13 euros for a second day of gains. Germany’s second-biggest lender fell 3.7 percent last week, the biggest loss for the period since December.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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