German Stocks Little Changed as ECB Maintains Rate
German stocks were little changed, halting three days of losses, as investors awaited tomorrow’s U.S. payrolls data and as the European Central Bank left its key interest rate unchanged at a record low.
Merck KGaA posted the biggest gain on the benchmark DAX Index, rising 5.5 percent, after agreeing to buy Luxembourg-based AZ Electronic Materials SA for $2.6 billion. Metro AG (MEO) slid 4 percent after Morgan Stanley lowered its recommendation for the retailer.
The DAX added less than 0.1 percent to 9,146.19 at 1:56 p.m. in Frankfurt. The gauge fell 2.8 percent in the past three days as investors weighed U.S. data to gauge when the Federal Reserve will reduce monthly bond purchases. The benchmark has advanced 20 percent this year. The broader HDAX Index (HDAX) was also little changed today.
“Merck’s deal is being seen as positive by the markets,” Matthias Jasper, head of equities at WGZ Bank AG in Dusseldorf, Germany, said in a phone interview. “It’s a fairly quiet day. People are nervous about tapering because of the pretty positive data from the U.S. It’s normal after a sharp run-up to see a bit of correction, but it’s not a trend in a major direction. Overall, I’m still bullish on equities.”
The volume of shares changing hands in DAX-listed companies was 27 percent lower than the 30-day average, according to data compiled by Bloomberg.
The DAX fell 0.9 percent yesterday after a report by ADP Research showed U.S. companies added more workers in November than economists had forecast, raising concern the Fed will pare its pace of asset purchases sooner than expected. The Labor Department will tomorrow publish last month’s reading on non-farm payrolls, and data may show the unemployment rate fell to 7.2 percent.
The Fed has said it will consider reducing its $85 billion of monthly bond purchases if the economy improves in line with its forecasts.
“Hiring showed a modest increase or was unchanged,” the U.S. central bank said late yesterday in its Beige Book report on economic conditions. Policy makers, who next meet on Dec. 17-18, will probably wait until March to reduce monthly bond purchases to $70 billion, according to the median estimate in Bloomberg’s survey on Nov. 8.
The ECB maintained its key interest rate at a record low, matching the estimate of every economist surveyed by Bloomberg. President Mario Draghi will address reporters at 2:30 p.m. in Frankfurt.
Merck climbed 5.5 percent to 131.20 euros, the highest price since it sold shares to the public in 1995. The acquisition will allow Merck to expand its chemicals business to include AZ’s products such as specialty chemicals used in the production of microchips and anti-reflective coatings used in hard-disk drives.
K+S AG (SDF), a German potash producer, gained 1 percent to 21 euros. The stock has still tumbled 40 percent so far this year, heading for its biggest annual loss since at least 1999, according to data compiled by Bloomberg.
Metro dropped 4 percent to 34.57 euros after Morgan Stanley cut its rating on the retailer to equal weight, similar to neutral, from overweight, citing a lack of immediate reasons for the stock price to go up. The stock has rallied 65 percent this year.
Drillisch AG (DRI) fell 3.4 percent to 20.04 euros after saying it will issue 100 million euros of bonds that can be exchanged for shares. The bonds are convertible into about 4.1 million shares, or 7.7 percent of all outstanding shares.
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