German Stocks Drop a Second Day as Cyprus Debates BailoutJonathan Morgan
German stocks retreated for a second day, extending this week’s tumble, as Cyprus’s lawmakers sought to raise enough money to qualify for a bailout from the European Union.
MAN SE sank the most in more than five months after Volkswagen AG made a low initial offer in its attempt to gain full control of the truckmaker. Adidas AG, the second-largest producer of sporting goods, gained 2.5 percent as U.S. rival Nike Inc. reported increased orders from China and rebounding profit margins.
The DAX Index slid 0.3 percent to 7,911.35 at the close of trading in Frankfurt. The gauge has fallen 1.6 percent this week, its first decline in five weeks, as euro-area finance ministers demanded that Cyprus impose a levy on bank deposits before agreeing to grant it a bailout. The broader HDAX Index decreased 0.2 percent today.
“Enduring discussions about possible measures for Cyprus instead of a solution have led to continued uncertainty in the markets,” Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in an e-mail.
The DAX has still risen 3.9 percent this year as reports pointed to a strengthening global economy and speculation continued that central banks will maintain stimulus measures.
The volume of shares changing hands in companies on the DAX was 7.6 percent lower than the average of the last 30 days, data compiled by Bloomberg showed.
Cyprus’s lawmakers begin a debate today on how to raise the money needed to obtain rescue funds from the European Union. The European Central Bank has said it will withdraw funding for the country’s lenders from Monday unless the government reaches an agreement with the other 16 members of the single currency.
The euro area’s finance ministers said Cyprus needs to find 5.8 billion euros ($7.5 billion) before they will approve the loans. Cyprus didn’t get the financial support it sought from Russia, though the two countries will continue to talk, Cypriot Finance Minister Michael Sarris said.
In Germany, a report showed that business confidence unexpectedly fell in March. The Ifo institute’s business climate index, based on a survey of 7,000 executives, declined to 106.7 this month from 107.4 in February. Economists had predicted the measure would rise to 107.8, according to the median of 42 forecasts in a Bloomberg survey.
MAN lost 2.6 percent to 84.80 euros. Volkswagen, which already owns 75.03 percent of the Munich-based company’s voting rights, will offer 80.89 euros apiece for the remaining shares.
Lanxess AG, the German chemical maker that joined the DAX in September, declined 4.5 percent to 55.66 euros as Bank of America Corp. downgraded the shares to neutral from buy, and reduced its earnings estimate by 45 percent. The brokerage forecast a weak first half of the year for 2013 with higher-than-expected inventories for the company.
HeidelbergCement AG, the world’s third-largest cement maker, retreated 2.1 percent to 56.08 euros as a gauge of construction-related companies posted the worst performance of the 19 industry groups on the Stoxx Europe 600 Index.
Adidas advanced 2.5 percent to 80.08 euros, snapping three days of losses, as Nike reported third-quarter profit that exceeded analysts’ estimates. The company also posted a gross margin that widened for the first time in nine quarters.
Air Berlin Plc climbed 5.6 percent to 2.55 euros after HSBC Holdings Plc upgraded Germany’s second-largest airline to neutral from underweight. HSBC said the trading environment for the airline appeared strong and new Chief Executive Officer Wolfgang Prock-Schauer showed an understanding of the industry.