Bloomberg News

German Stocks Retreat for Third Day, Complete Weekly Decline

January 09, 2009

German stocks fell for a third day, sending the DAX Index to its steepest weekly drop in a month, after a U.S. report showed more job losses and a higher unemployment rate in the world’s largest economy.

Commerzbank AG tumbled 11 percent. Societe Generale SA advised clients to sell the stock after Germany’s second-largest bank said yesterday it will receive an additional 10 billion euros ($13.7 billion) from the country’s Soffin stabilization fund, while the government takes a 25 percent stake in the company. Infineon Technologies AG sank 8.9 percent as Merrill Lynch & Co. cut its recommendation to “underperform.”

The benchmark DAX Index declined 2 percent to 4,783.89, extending the retreat this week to 3.8 percent. DAX (DAX) futures expiring in March dropped 2.3 percent as of 5.40 p.m. in Frankfurt. The broader HDAX decreased 1.9 percent.

“The figures are very bad,” said Joerg Rahn, a Hamburg-based investment strategist at M.M. Warburg. “Unemployment may rise further following firings before Christmas. You can’t talk about a reversal of the trend yet.”

The U.S. lost 524,000 jobs in December, the Labor Department said today. The decline made last year’s collapse in employment the worst since the end of World War II, while the unemployment rate climbed to a 15-year high of 7.2 percent.

Today’s data will intensify pressure on U.S. lawmakers to speed the economic stimulus package of President-elect Barack Obama, which may exceed $775 billion, through Congress.

Annual Slump

Germany’s DAX Index tumbled 40 percent in 2008 as credit-related losses and writedowns at financial firms topped $1 trillion worldwide and the U.S., Japan and Europe fell into the first simultaneous recessions since World War II.

Commerzbank dropped 11 percent to 4.67 euros today. Societe Generale cut its recommendation on the stock to “sell” from “hold,” saying interest on the state funds paid by the bank will be a “huge burden.”

M.M. Warburg Co. downgraded the stock to “sell” from “hold,” while JPMorgan Chase & Co. and UBS AG lowered their share-price estimates.

Allianz SE, which is selling its Dresdner Bank unit to Commerzbank, rallied 6.2 percent to 70.80 euros. The “clear intention” to finish the transaction is positive for Allianz, WestLB AG analyst Andreas Schaefer wrote in a note today. He reiterated his “buy” recommendation, while reducing his share-price estimate 8.6 percent to 96 euros.

Infineon, Postbank

Infineon dropped 8.9 percent to 97 cents. Merrill lowered its recommendation for Europe’s second-largest chipmaker from “neutral,” saying it maintains its “cautious view” ahead of potential refinancing.

Deutsche Postbank AG retreated 6 percent to 13.45 euros. Germany’s biggest consumer bank by clients said its 2008 results will be “clearly negative” as deteriorating capital markets burdened the fourth quarter and the lender cut stock investments.

Deutsche Bank AG, which is buying an almost 30 percent stake in Postbank, dropped 5.8 percent to 24.31 euros. The equity proprietary trading operation of Germany’s largest bank lost about $500 million in the fourth quarter, according to two people with knowledge of the situation.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

Bijou Brigitte Modische Accessoires AG (BIJ GY) declined 3 percent to 81.90 euros after the costume jewelry distributor said 2008 net income will decline “slightly.”

GK Software AG (GKS GY) surged 8.8 percent to 12.29 euros. The supplier of software to retailers was rated “buy” in initiated coverage at SES Research GmbH, which set its share-price estimate at 28 euros.

HeidelbergCement AG (HEI GY) climbed for a third day, adding 3.2 percent to 34.10 euros. Germany’s largest cement maker, an asset of deceased German billionaire Adolf Merckle, gained on speculation Switzerland’s Holcim Ltd. may be interested in buying the company.

Jenoptik AG (JEN GY) slipped 2.2 percent to 5.78 euros. UniCredit Markets & Investment Banking cut its recommendation for Europe’s largest maker of traffic cameras to “hold” from “buy” yesterday.

Separately, Jenoptik said it aims to revive revenue and is on the lookout for companies to take over.

MorphoSys AG (MOR GY) dropped 4.5 percent to 16.98 euros after Commerzbank downgraded the biotechnology company that makes antibodies for use in drug development to “hold” from ‘buy.”

SGL Group AG (SGL GY) lost 5.2 percent to 21.09 euros. Dresdner Kleinwort cut its recommendation for the world’s largest maker of carbon and graphite products to “hold” from “buy.”

Wilex AG (WL6 GY) rallied 16 percent to 3.25 euros, a four-week high. The biotechnology company working on cancer drugs said it plans to acquire the oncology portfolio of Brussels-based UCB Pharma SA in exchange for 1.82 million new shares.

To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.

To contact the editor responsible for this story: Daniel Hauck at dhauck1@bloomberg.net.


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