Bloomberg News

German Stocks Drop to Seven-Week Low; Kabel Deutschland Falls

June 08, 2011

June 8 (Bloomberg) -- German stocks retreated to a seven- week low as Federal Reserve Chairman Ben S. Bernanke gave no indications he’s planning a third round of stimulus measures to support the U.S. economy.

Kabel Deutschland Holding AG fell the most since its initial public offering after reporting a full-year loss. Heidelberger Druckmaschinen AG slid 5 percent as Handelsblatt said the company is unlikely to reach its annual sales target. EON AG, Germany’s biggest utility, gained for a second day.

The benchmark DAX Index dropped 0.6 percent to 7,060.23 at the 5:30 p.m. close in Frankfurt. The gauge has fallen 3.2 percent this month amid growing concern the global economy is weakening after U.S. jobs and manufacturing data missed forecasts. The measure has still rallied 93 percent since March 2009 as the Fed used quantitative easing, or QE, measures to support growth. The broader HDAX Index lost 0.7 percent today.

“The uninspiring tone of Bernanke’s economy assessment yesterday, in which Federal Reserve chairman offered no hints on QE3, reflected negatively on the markets,” said Anita Paluch, a sales trader at ETX Capital in London.

Consumer spending is being held back by an unemployment rate that rose to 9.1 percent last month, a drop in home values and tight credit, Bernanke said in a speech in Atlanta. He said growth is likely to pick up as fuel prices moderate and disruptions of parts supplies ease as factories in Japan recover from an earthquake and tsunami.

Industrial Production

German stocks extended losses as a report showed the country’s industrial production unexpectedly declined for the first time in four months in April, led by a drop in construction output. Production fell 0.6 percent from March, when it rose a revised 1.2 percent, the Economy Ministry in Berlin said. Economists had forecast a gain of 0.2 percent, the median of 36 estimates in a Bloomberg News survey showed.

Kabel Deutschland slumped 5 percent to 42.23 euros, the largest drop since the company’s IPO in March last year. Germany’s biggest cable operator said its full-year net loss widened as television customers taking up Internet and phone services didn’t make up for costs related to refinancing debt.

The net loss for the 12 months ended March 31 was 43.5 million euros ($66.5 million), compared with a loss of 40.1 million euros a year earlier, the company said. Earnings were weighed down by 48.8 million euros in costs related to refinancing debt. Analysts had predicted a 43.4 million-euro loss, the average of 11 estimates compiled by Bloomberg.

Technology Companies

Infineon Technologies AG, Europe’s second-biggest chipmaker and SAP AG, the largest maker of business management software, lost 2.5 percent to 7.69 euros and 1.1 percent to 41.73 euros, respectively. Technology shares posted the worst performance among 19 industry groups in the Stoxx Europe 600 Index, losing 2 percent.

Heidelberger Druckmaschinen sank 5 percent to 2.65 euros, the lowest price since July 2009. The printing-press maker is working “step by step” toward annual sales of 3 billion euros, though is unlikely to reach that target this fiscal year, Handelsblatt reported, citing an interview with Chairman Bernhard Schreier.

EON gained 1 percent to 19.19 euros as Morgan Stanley said in a note today that it now sees good value in German utilities after recent underperformance.

--Editors: Jason Carey, Andrew Rummer

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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