German Stocks Fall as Manufacturing Unexpectedly Shrinks
German stocks declined for a fourth time in five days as data showed manufacturing unexpectedly contracted in March, while Cyprus’s President worked on a plan to get a European Central Bank-led bailout.
Lanxess AG fell the most since September 2011 after the chemical maker forecast a drop in quarterly profit. SAP AG lost 2.1 percent as U.S. peer Oracle Corp. reported profit that missed analysts’ predictions. Siemens AG advanced to its highest since July 2011 after Morgan Stanley raised its rating on Europe’s biggest engineering company.
The DAX Index (DAX) retreated 0.9 percent to 7,932.51 at the close of trading in Frankfurt. The gauge has still gained 4.2 percent this year as reports pointed to a strengthening global economy amid speculation that central banks will maintain stimulus measures. The broader HDAX Index declined 0.8 percent.
“Today’s PMI figures clearly indicate that the euro-zone economy has remained stuck in recession,” Martin van Vliet, an economist at ING Bank NV in Amsterdam, wrote in emailed comments. “With fiscal austerity, tight credit and high unemployment set to keep most peripheral economies in recession, the path back to growth will likely be slow and bumpy.”
The volume of shares changing hands in companies on the DAX was 8.7 percent higher the average of the last 30 days, data compiled by Bloomberg showed.
A German index based on a survey of purchasing managers in the manufacturing industry declined to 48.9 this month from 50.3 in February, while a services gauge fell to 51.6 from 54.7, London-based Markit Economics said in a report today. A reading below 50 indicates contraction. Economists had forecast 50.5 for the manufacturing index and 55.0 for the services gauge, according to the median estimates in Bloomberg News surveys.
Euro-area services and manufacturing output contracted more than economists estimated in March. A composite index based on a survey of purchasing managers in both industries fell to 46.5 from 47.9 in February, Markit Economics said today. Economists had forecast 48.2, according to the median of 23 estimates in a Bloomberg survey.
“This has strongly dampened hopes of slight growth of the euro-zone economy,” Christoph Weil, a senior economist at Commerzbank AG in Frankfurt, wrote in an email. “The ECB will see this as confirmation of its economic pessimism.”
In Cyprus, President Nicos Anastasiades met advisers to draft a new plan to obtain a bailout after lawmakers in the island nation rejected the euro area’s proposed levy on bank deposits. The alternative plan may include a new version of the deposit tax, according to an official who asked not to be identified, citing government policy.
The ECB said it will cut Cypriot banks off from emergency funds after March 25 unless the Mediterranean island agrees on a bailout with international creditors. Euro-area finance ministers may hold a call to discuss the situation in Cyprus tonight or tomorrow, a European official said today on condition of anonymity.
“Suddenly the ECB is playing a tough game and setting the bar at a high level,” Patrick Legland, head of research at Societe Generale SA, told Francine Lacqua on Bloomberg Television. “We’ll see in the next few weeks that they are clearly leading the direction. The ECB is saying either you find a solution or we’ll not put any more liquidity in your banking system, which is a very strict and very tough announcement.”
Lanxess AG tumbled 6 percent to 58.31 euros. Earnings before interest, taxes, depreciation, amortization and one-time items may fall to as low as 160 million euros ($206 million) in the current period from last year’s 369 million euros, the company said.
SAP AG, Germany’s most valuable company, slipped 1.35 euros to 62.96 euros. Oracle Corp., the world’s second-largest maker of business applications, reported fiscal third-quarter profit and sales that missed analysts’ predictions.
BASF SE declined 3.1 percent to 71.30 euros. The world’s biggest chemical company lost a U.S. appeals court bid to force Makhteshim-Agan Industries Ltd. to stop selling a version of its popular termite killer, a day after filing a new patent suit against that competitor.
3W Power SA plummeted 44 percent to 64.5 cents, the lowest price since the stock started trading in July 2008, after saying the banking crisis in Cyprus may damage a key client’s ability to pay what it owes the company’s AEG Power Solutions BV energy control-systems division.
Siemens AG rose 1.7 percent to 86.88 euros. Morgan Stanley upgraded the company to overweight, the equivalent of a buy rating, and added it to its Europe best ideas list, citing its potential to improve returns through disposals.
Deutsche Bank AG added 0.8 percent to 32.70 euros. Co-Chief Executive Officer Anshu Jain said the performance of continental Europe’s biggest bank was “solid” in the first quarter. “We expect our first quarter to be solid across all businesses, driven by robust revenues similar to last year’s performance,” Jain, 50, said at a conference in London today. Deutsche Bank will report quarterly earnings on April 30.
RWE AG and EON SE, Germany’s largest utilities, advanced 2.9 percent to 29.73 euros, and 4.2 percent to 13.71 euros, respectively.
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