Bloomberg News

German Stocks Fall, Led by Slides in Deutsche Bank, Commerzbank

September 12, 2011

Sept. 12 (Bloomberg) -- German stocks retreated, with the benchmark DAX Index extending last week’s selloff, amid speculation that the federal government is preparing for Greece to default.

Deutsche Bank AG and Commerzbank AG, Germany’s two biggest lenders, followed declines in European financial shares. HeidelbergCement AG sank 3.7 percent as Bankhaus Metzler recommended selling the company’s shares.

The DAX Index lost 2.3 percent to 5,072.33 at the 5:30 p.m. close in Frankfurt. The benchmark slumped last week, erasing the two previous weeks of gains, as concern escalated that policy makers won’t be able to stop Europe’s sovereign-debt crisis from growing and damaging the economic recovery. The broader HDAX Index also declined 2.3 percent today.

“The market is in free fall again,” said Ansgar Krekeler, a sales analyst at WGZ-Bank AG in Dusseldorf. “Politicians and central banks are focusing on the financial sector as a ‘Lehman moment’ is threatening.”

Officials in Chancellor Angela Merkel’s government are debating how to shore up German banks should Greece fail to meet the budget-cutting terms of its aid package, three coalition officials said on Sept. 9. BNP Paribas SA, Societe Generale SA and Credit Agricole SA may have their ratings cut by Moody’s Investors Service this week because of their Greek debt holdings, two people with knowledge of the matter said.

Greece’s Prime Minister George Papandreou, vowing to avoid a default and keep his country in the euro, approved new measures to help plug a budget gap as resistance builds to extending more aid to the European Union’s most-indebted member.

Bank Stocks

Deutsche Bank plummeted 7.3 percent to 21.40 euros, its lowest price in 2 1/2 years. Smaller competitor Commerzbank lost 8.3 percent to 1.53 euros, the lowest price on record. Banking shares were the worst performers amid 19 industry groups in the benchmark Stoxx Europe 600 Index today, falling 4.6 percent.

A Bloomberg index showed 46 lenders trading at 0.56 times book value, the cheapest since the post-Lehman lows of March 2009, signaling investors estimate their net assets are worth less than the companies claim and are demanding discounts for perceived risks. Valuations reflect the impact of a potential sovereign default for some banks, according to Barclays Plc analysts led by Jeremy Sigee.

HeidelbergCement, ThyssenKrupp

HeidelbergCement lost 3.7 percent to 26.09 euros, the lowest in more than two years, as Bankhaus Metzler downgraded the cement maker to “sell” from “buy.”

EON AG and RWE AG, Germany’s two largest nuclear operators, fell 3.7 percent to 12.88 euros and 4 percent to 21.77 euros after a blast at a nuclear-waste facility in France.

Continental AG, Europe’s second-biggest car-parts maker, declined 5.7 percent to 40.97 euros as Exane BNP Paribas downgraded the stock to “neutral” from “outperform.”

Volkswagen AG preferred shares slipped 1.5 percent to 102.20 euros. Europe’s biggest carmaker said it has no intention of selling or reducing its stake in Suzuki Motor Corp. after the German carmaker accused its partner of breaking the rules of the two manufacturers’ contract agreement by agreeing to purchase engines from Fiat SpA.

Infineon Technologies AG led rising shares in the DAX as Europe’s second-biggest chipmaker was raised to “buy” from “neutral” at UBS AG. The stock advanced 2.7 percent to 5.72 euros.

--Editors: Angela Cullen, Mariajose Vera

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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