German Stocks Decline After Fed Minutes; Allianz FallsSofia Horta e Costa
German stocks declined the most in two weeks, erasing this year’s gains, on concern the U.S. Federal Reserve will scale back its asset-purchase program in the world’s largest economy.
Deutsche Bank AG and Commerzbank AG, the country’s biggest lenders, lost at least 2.7 percent. Allianz SE retreated to its lowest in more than two months, even after saying profit more than doubled in the fourth quarter. Continental AG and Bayerische Motoren Werke AG led auto-related stocks lower.
The DAX Index slipped 1.9 percent to 7,583.57 at the close of trading in Frankfurt, its biggest drop since Feb. 4. The benchmark gauge has lost 0.4 percent so far this year, among the worst performers of 24 developed-market indexes tracked by Bloomberg. The volume of shares changing hands in DAX-listed companies was 18 percent higher than the 30-day average, according to data compiled by Bloomberg. The broader HDAX Index fell 1.8 percent today.
“Too much liquidity is not helping the market, it’s creating bubbles and wrong pricing signals,” Carsten Hilck, who oversees 5 billion euros ($6.6 billion) at Union Investment Privatfonds GmbH in Frankfurt, said in a phone interview. “The Fed’s minutes are not that bad actually. The Fed has said that when the unemployment rate reaches 6.5 percent they would scale back, and it looks like soon it will reach that level. We are still bullish on Germany.”
Fed officials continued to debate whether monetary easing risks unleashing inflation or fueling asset-price bubbles.
Several participants at the Federal Open Market Committee’s Jan. 29-30 meeting “emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved,” according to minutes released after the close of European markets yesterday.
In Germany, services output expanded less than forecast this month, according to a report from London-based Markit Economics. An index based on a survey of purchasing managers in the industry retreated to 54.1 from 55.7 in January, compared with the median forecast for a 55.5 level in a Bloomberg survey. The measure for factory output rose to 50.1 in February from 49.8 last month. A reading above 50 signals expansion.
Euro-area services and manufacturing contracted at a faster pace than economists forecast in February, according to a separate survey from Markit.
A composite index of both industries in the 17-nation currency bloc fell to 47.3 from 48.6 in January. Economists had forecast a reading of 49, according to the median of 22 estimates in a Bloomberg News survey.
In Italy, Pier Luigi Bersani is seeking to rally voters in the three must-win regions of Lombardy, Sicily and Campania before the nation’s parliamentary election on Feb. 24-25. Former premier Silvio Berlusconi ran second to Bersani in opinion surveys before Italy’s two-week polling blackout began.
“The elections in Italy this weekend are a risk,” Hilck said. “When the right politicians are elected in Italy -- not Berlusconi -- the market could have a little relief rally.”
Deutsche Bank and Commerzbank fell 3.9 percent to 34.80 euros, and 2.7 percent to 1.43 euros, respectively.
Allianz, Europe’s biggest insurer, lost 2.4 percent to 101.75 euros, its lowest price since Dec. 5. Net income rose to 1.22 billion euros in the fourth quarter from 492 million euros the previous year, the Munich-based company said. That beat the 1.15 billion-euro median estimate in a Bloomberg survey.
Continental, Europe’s second largest auto-parts supplier, dropped 2.7 percent to 88.33 euros. BMW, the biggest maker of luxury cars, slid 2.4 percent to 69.06 euros, while Daimler AG, the third-largest, declined 2.3 percent to 44.09 euros. A gauge of auto-related companies fell the most on the Stoxx Europe 600 Index.
Bilfinger SE retreated 3 percent to 79.04 euros, its biggest drop since Nov. 15. UBS AG cut its recommendation on the German builder to neutral from buy, with analyst Gregor Kuglitsch saying the company’s transformation into services from a construction-dominated business is already reflected in the share price.