German Stocks Decline, Extending Worst Start Since 2010

German stocks fell for a second day, after the DAX Index posted its worst January since 2010, as data showed Chinese manufacturing declined last month, and a measure of factory activity in the U.S. missed forecasts.

Allianz SE fell 1.8 percent as Mediobanca SpA downgraded Europe’s biggest insurer. Deutsche Bank AG and Commerzbank AG followed a gauge of European lenders lower. K+S AG advanced 2.1 percent as Liberum Capital Ltd. upgraded its recommendation on the potash producer.

The DAX retreated 1.3 percent to 9,186.52 at the close of trading in Frankfurt, its lowest level since Dec. 18. The gauge lost 2.6 percent in January as weaker-than-forecast Chinese data added to concern that growth in developing nations reliant on the world’s second-biggest economy will falter, and as the Argentinian government’s decision to allow the peso to devalue triggered a rout in emerging-market currencies. The broader HDAX Index also lost 1.3 percent today.

“Chinese PMI is being used as an excuse for selling in the DAX,” Thomas Gerhardt, who helps manage about 1.5 billion euros ($2 billion) as head of global emerging markets at Edmond De Rothschild in Frankfurt, said in a telephone interview. “You can’t ignore that the level of risk aversion about emerging markets has increased significantly.”

In China, a manufacturing gauge showed output slowed in January to its lowest level in six months. The purchasing managers’ index fell to 50.5 from 51 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1. A reading above 50 signifies an increase in activity.

U.S. Manufacturing

In the U.S., manufacturing activity expanded in January at the weakest pace in eight months, according to the Institute for Supply Management’s factory index. The gauge decreased to 51.3 from 56.5 the prior month. The median forecast of economists surveyed by Bloomberg called for a drop to 56.

Allianz slipped 1.8 percent to 121.55 euros. Mediobanca downgraded the shares to underperform, similar to a sell rating, from neutral, saying the insurer’s fourth-quarter guidance indicates difficulty in generating earnings growth.

Deutsche Bank and Commerzbank, Germany’s largest lenders, fell 1.9 percent to 35.22 euros and 2.8 percent to 12.27 euros, respectively. A gauge of banking stocks posted the worst performance of the 19 industry groups on the Stoxx Europe 600 Index, falling 2.6 percent.

Aurubis AG dropped 5.5 percent to 40.60 euros. The operator of copper smelting and refining facilities posted a first-quarter loss of 73 million euros, compared with a profit of 13 million euros a year earlier, because of weak copper scrap and sulphuric acid markets, as well as a large-scale shutdown of operations in Hamburg.

K+S Upgraded

K+S gained 2.1 percent to 22.55 euros, for the biggest gain on the DAX. Liberum upgraded its rating of Europe’s largest potash supplier to hold from sell, citing a stabilization of the industry’s capacity and rising prices. The broker also said that recent bond issues have reduced the company’s short-term financing risks and may allow it continue to pay dividends.

Evonik Industries AG climbed 0.7 percent to 28.20 euros after Exane started coverage of the chemical maker with an outperform rating, similar to a buy recommendation. The broker said that earnings from Evonik’s methionine product for chicken feed will rebound as competitors struggle with the manufacturing process, and its synthetic rubber operation will improve as demand returns to normal after a period of destocking.

The volume of shares changing hands in DAX-listed companies was 22 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.