German Stocks Fall as China Growth Cut Outweighs Ifo DataJonathan Morgan
German stocks declined for a fourth day as Goldman Sachs Group Inc. cut its forecast for Chinese growth, outweighing data that showed business confidence in Europe’s biggest economy increased for a second month in June.
Metro AG slumped 5.5 percent after Citigroup Inc. downgraded Germany’s largest retailer. Kabel Deutschland Holding AG gained 1.7 percent after Vodafone Group Plc agreed to buy the cable operator for 7.7 billion euros ($10.1 billion).
The DAX dropped 1.2 percent to 7,692.45 at the close of trading in Frankfurt, its lowest level since April 23. The equity benchmark retreated 4.2 percent last week, erasing its gains for the quarter, as investors prepared for a potential paring of stimulus later this year by the Federal Reserve. The broader HDAX Index fell 1.4 percent today.
“Now the Ifo figures have come in without a positive surprise, it leads to a bit of disappointment,” Soeren Steinert, who helps manage about $24 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, said in a telephone interview. “The most important topic today is the performance of the Chinese stock market, which is facing liquidity issues and fell by more than 5 percent. This is putting extra pressure on the market.”
China’s stocks fell the most in four years, as the CSI 300 Index entered a bear market, after the central bank signaled it will maintain efforts to curb speculative lending and Goldman Sachs said a cash squeeze is hurting growth.
Goldman Sachs cut its estimate for Chinese economic growth in 2013 to 7.4 percent from 7.8 percent, citing weaker economic indicators and tighter financial conditions.
German business confidence increased amid speculation that the recovery in Europe’s largest economy is gathering pace. The Ifo institute’s business climate index, based on a survey of 7,000 executives, rose to 105.9 from 105.7 in May, matching the average economist estimate in a Bloomberg News survey.
Metro slumped 5.5 percent to 23.55 euros. Citigroup downgraded the shares to sell from neutral, citing weakening growth in Russia -- which the bank said accounted for a quarter of Metro’s operating cash flow last year -- and the declining rouble.
Deutsche Bank AG and Commerzbank AG, Germany’s largest lenders, fell 2.1 percent to 32.50 euros, and 1.9 percent to 7.13 euros, respectively.
Kabel Deutschland, Germany’s biggest cable operator, added 1.7 percent to 85.50 euros. Kabel’s board plans to recommend Vodafone’s 87-euro per share cash offer, Newbury, England-based Vodafone said in a statement today.
Daimler AG rose 0.8 percent to 43.51 euros, paring earlier gains of as much as 2.7 percent. The third-biggest luxury-vehicle maker will hire about 4,500 workers during the summer period for three of its car plants in Germany because of high demand, according to a report in Automobilwoche, which cited a company spokesman.
The volume of shares changing hands in DAX-listed companies was 23 percent higher than the average of the past 30 days, according to the data.