German Stocks Retreat for Second Day; Commerzbank, Deutsche Bank Lead Drop
German stocks fell for a second day, led by financial shares amid concern that Greece’s debt crisis may spread to other European nations.
Commerzbank AG, Germany’s second-biggest bank, slid 1.5 percent to a two-month low. Symrise AG, the world’s fourth- biggest maker of scents and flavors, sank after Citigroup Inc. cut its recommendation on the stock. Henkel AG tumbled for a third day.
The benchmark DAX Index lost 48.41, or 0.8 percent, to 5,958.45 in Frankfurt, for the lowest closing level since March 15. The broader HDAX Index slid 1 percent today.
European stocks plunged yesterday, erasing their gains for the year, amid concern that the 110 billion-euro ($143 billion) rescue package for Greece will need to be extended to Spain and Portugal. Declines accelerated after Spanish Prime Minister Jose Luis Rodriguez Zapatero called the speculation “complete madness.”
“Equity markets have been considered toppy by many for some months now, leaving an adjustment arguably looking overdue,” Ben Potter, a market strategist at IG Markets in Melbourne, wrote in a note.
European Central Bank council member Axel Weber said today that Greece’s fiscal crisis is threatening “grave contagion effects” in the euro area.
Financial shares led declines in the DAX. Commerzbank sank 1.5 percent to 5.719 euros, the lowest level since March 4. Deutsche Bank AG, the country’s largest lender, slid 1.4 percent to 49.775 euros.
Symrise dropped 1.8 percent to 18.15 euros. The stock was cut to “hold” from “buy” at Citigroup, which said “at least for the medium-term we believe the relatively full valuation will prove a hindrance for further share price outperformance despite the solid growth potential for the company.”
Henkel sank 2.2 percent to 38.76 euros. The maker of Loctite glues and Persil detergent declined as a profit increase failed to impress some investors and the company forecast higher raw-material prices.
“Investor expectations are much too high and a lot of the good news had been priced in already,” said Joerg Frey, an analyst at M.M. Warburg in Hamburg, who rates the stock a “hold.”