German Stocks Decline Before Cyprus Votes on Bank Levy
German stocks fell for a third day amid investor concern that Cypriot lawmakers will reject a 5.8 billion-euro ($7.5 billion) bank-deposit levy needed to get a European Union-led bailout at a meeting today.
Daimler (DAI) AG declined to its lowest price in three weeks after data showed a contraction in Europe’s car-sales accelerated in February. ThyssenKrupp AG (TKA) retreated the most since March after Handelsblatt reported Germany’s biggest steelmaker is preparing for a capital increase.
The DAX Index (DAX) slipped 0.8 percent to 7,947.79 at the close of trading in Frankfurt, its biggest drop in three weeks. The gauge has still gained 4.4 percent this year as European Central Bank President Mario Draghi promised to do whatever is necessary to preserve the single currency. The broader HDAX Index also lost 0.8 percent today.
“The situation in Cyprus remains wearisome and is the key driver for equities,” Ion Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Investors should not underestimate the negative impact from the EU decision to impose taxes on deposits. All the confidence building process the ECB has put in place since last July could unravel quite fast.”
The volume of shares changing hands in companies on the DAX was 7.4 percent greater than the average of the last 30 days, data compiled by Bloomberg showed.
Shares fell yesterday after euro-area finance ministers forced Cyprus to adopt an unprecedented levy on bank deposits to help with the cost of the latest euro-zone bailout.
Cypriot lawmakers began debating how to spread the proposed tax on bank deposits today. Parliament will probably reject the proposals, President Nicos Anastasiades told Sweden’s TV4 channel in an interview today. The levy, announced March 16, sparked outrage in the island nation and concern among investors about setting a precedent by breaking the taboo against raiding bank accounts. Banks and stock markets in Cyprus are closed today and tomorrow.
The DAX fell even as German investor confidence unexpectedly rose to a three-year high in March. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to 48.5 from 48.2 in February. Economists forecast a decline to 48.1, according to the median of estimates in a Bloomberg News survey.
Europe’s car-sales contraction accelerated in February because of a steepening decline in Germany, the region’s biggest market. Registrations dropped 10 percent to 829,359 vehicles last month from 923,553 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement.
Daimler lost 2.4 percent to 44.70 euros. The world’s third- biggest maker of luxury cars reported a 1.7 percent drop in European sales last month.
ThyssenKrupp slid 5.5 percent to 17.37 euros. The steelmaker is preparing to sell more than 1 billion euros of shares to increase its capital, Handelsblatt reported, citing unidentified people close to the company. ThyssenKrupp declined to comment, the newspaper said.
Bayerische Motoren Werke AG (BMW) fell 1.6 percent to 69.07 euros. The world’s biggest luxury-car maker forecast 2013 pretax profit at the same level as 2012 as European auto sales drop and it spends to bring out 25 new models in the next two years.
Metro AG (MEO) climbed 5.4 percent to 22.94 euros, for its biggest gain since November 2011. UBS AG analysts recommended buying shares in Germany’s largest retailer, predicting “a new era” under Chief Executive Officer Olaf Koch, saying he “takes a more proactive stance towards portfolio rationalization than his predecessor.”
Koch, who took office at the start of 2012, is focusing on the Cash & Carry wholesale business and the Media-Saturn electronics unit as he cuts investment in Kaufhof department stores and Real grocery outlets.
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