German Stocks Retreat as EU Leaders Fail to Agree on Greek Loan
German stocks retreated as governments failed to agree on releasing a loan payment to spare Greece from default.
EON AG and RWE AG (RWE), the country’s biggest utilities, fell at least 1 percent. Drillisch AG (DRI) jumped the most since Feb. 7 after Financial Times Deutschland reported the mobile phone equipment wholesaler is in "casual talks" with Freenet AG. (FNTN)
The benchmark DAX Index (DAX) lost 0.2 percent to 7,150.21 at the 5:30 p.m. close in Frankfurt. The benchmark has fallen 5 percent from this year’s high on May 2 as investors speculated that the U.S. economic recovery is slowing and that Greece will fail to repay all of its debt. The broader HDAX Index declined 0.3 percent today.
“It’s difficult to see what the solution is for Greece if European leaders can’t agree,” said Robert Halver, head of research at Baader Bank AG in Frankfurt. “If we cannot define a perspective for Greece, we have to think about plan B, which might be Greece exiting the euro zone. We can expect volatility in the coming weeks. Nobody wants to accept higher risk exposure ahead of summer.”
On the eve of a confidence vote that may bring down Prime Minister George Papandreou’s government, euro-area finance ministers pushed Greece to pass laws to cut the deficit and sell state assets. They left open whether the country will get the full 12 billion euros ($17.2 billion) promised for July as part of last year’s 110 billion-euro lifeline.
“We forcefully reminded the Greek government that by the end of this month they have to see to it that we are all convinced that all the commitments they made are fulfilled,” Luxembourg Prime Minister Jean-Claude Juncker told reporters early today after chairing a euro-crisis meeting in his country.
The seven-hour finance ministers’ meeting coincided with the start of a three-day Greek parliamentary debate in Athens over a confidence vote in a new cabinet at what Papandreou called a “critical crossroads.” Papandreou has 155 seats in the 300-seat parliament.
Stocks pared some of their losses after Juncker, who leads the group of euro-area finance ministers, said he doesn’t believe Italy is in danger amid the euro area’s debt crisis. Private investors will be present in any second rescue package for Greece, Juncker told reporters in Luxembourg today, though he said he doesn’t know if they’ll be “enthusiastic.”
EON slipped 1 percent to 19.06 euros, while RWE declined 1.6 percent to 37.33 euros. German electricity for delivery next year fell to its lowest in three weeks as fuel prices declined, signaling lower costs for power stations in Europe’s biggest market.
Drillisch jumped 5.6 percent to 7.82 euros after Financial Times Deutschland cited Freenet Chief Executive Officer Christoph Vilanek as saying there are “casual talks” between his company and Drillisch. Freenet isn’t in “formal talks” and there is no due diligence with Drillisch, Elke Ruether, a Freenet spokeswoman, said by telephone. Drillisch spokesman Oliver Keil declined to comment on the report. Freenet added 1.6 percent to 9.38 euros.
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