Bloomberg News

German Stocks Retreat After U.S. Job Figures; RWE, EON Decline

July 08, 2011

July 8 (Bloomberg) -- German stocks fell after U.S. employers added fewer workers than forecast in June and the jobless rate unexpectedly climbed, increasing concern about the strength of the world’s biggest economy.

RWE AG, Germany’s second-largest utility, dropped 4 percent after the Financial Times Deutschland reported its supervisory board may discuss a share sale in August. Vossloh AG sank 8.2 percent as the railway-equipment maker cut its sales and operating earnings forecasts. Deutsche Boerse AG led rising shares, climbing 0.8 percent.

The DAX lost 0.9 percent to 7,402.73 at the 5:30 p.m. close in Frankfurt, reversing an earlier advance of as much as 0.7 percent. The gauge has fallen 0.2 percent this week even as finance ministers approved an aid payment to Greece and the European Central Bank eased collateral rules to help Portugal access emergency funds. The broader HDAX Index also retreated 0.9 percent today.

“It’s not an easy time for the U.S.,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn. “There are more question marks about the dynamic of the economic recovery and we can expect a correction.”

Last month’s 18,000 increase in U.S. payrolls followed a 25,000 gain in May that was less than half the rise initially estimated, Labor Department data showed today. The median estimate in a Bloomberg News survey called for a June gain of 105,000. The unemployment rate rose to 9.2 percent, the highest level this year. Hiring by companies, which excludes government agencies, was the weakest since May 2010.

German Exports

In Germany, separate data showed exports increased more than economists forecast in May, adding to signs the sovereign debt crisis isn’t harming Europe’s largest economy.

RWE fell 4 percent to 37.02 euros after the FT Deutschland cited Chief Executive Officer Juergen Grossmann as saying the board may discuss a stock sale early next month.

EON AG, Germany’s biggest utility, lost 2.4 percent to 19.32 euros as the upper house of parliament, the Bundesrat, passed seven of the eight government bills that underpin Chancellor Angela Merkel’s plan to exit nuclear power and speed the transition to renewables.

Vossloh slumped 8.2 percent to 87.60 euros, the biggest drop since October 2009, after forecasting sales of 1.25 billion euros ($1.8 billion) in 2011, down from a previous prediction of 1.4 billion euros. Earnings before interest and tax will be as little as 120 million euros, compared with a previous Ebit forecast of more than 160 million euros. The company cited “significantly delayed call-offs of products to be installed in Chinese high-speed railway lines.”

Metro Downgrade

Metro AG declined 2.6 percent to 39.77 euros, the lowest price since August 2010, as BofA Merrill Lynch Global Research downgraded Germany’s biggest retailer to “underperform” from “neutral.”

Deutsche Boerse gained 0.8 percent to 54.96 euros, adding to a 2.4 percent increase yesterday following NYSE Euronext shareholders’ approval of the German stock-exchange operator’s $9.39 billion takeover of its U.S. counterpart. The stock was the best performer in the benchmark DAX Index today.

--Editors: Tom Lavell, 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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