Bloomberg News

German Stocks Fall After Three-Day Rally; Deutsche Bank Declines

September 28, 2011

Sept. 28 (Bloomberg) -- German stocks retreated, erasing some of the gains from yesterday’s biggest rally in 16 months, as the pressure grew on European Union leaders to find a solution to the sovereign-debt crisis.

The DAX Index lost 50.02, or 0.9 percent, to 5,578.42 at the 5:30 p.m. close in Frankfurt. The gauge fluctuated between gains and losses at least 20 times during the day. It rallied the most since May 2010 yesterday and has still climbed 10 percent from this year’s lowest level on Sept. 12 as investors speculated a 29 percent slump since June 30 wasn’t commensurate with the outlook for earnings.

“Policy makers around the world have urged their European counterparts to tackle the growing problems more decisively,” Kate Moore, a New-York based global equity strategist at BofA Merrill Lynch, wrote in a report. “Germany may be overconfident in the belief that the consequences of a Greek default can be contained.”

The European Commission is resisting a push to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit, a European official said.

The commission opposes ideas that are being floated by some government officials to get banks to accept bigger so-called haircuts and doesn’t want to have talks about any such attempt, the official said on condition of anonymity because the deliberations are private.

Athens Delegation

A delegation from the EU commission, the European Central Bank and International Monetary Fund will return to Athens tomorrow as officials race to put in place a package of measures that will ring-fence Greece. The Financial Times reported late yesterday that some euro-area countries are demanding private creditors take bigger writedowns on their Greek bond holdings.

German Chancellor Angela Merkel said today that she’s waiting for a report from the EU, ECB and IMF on Greece’s budget progress before deciding whether revisions are needed to the financing package agreed in July. Euro-area leaders announced 159 billion euros ($217 billion) in new aid for Greece on July 21 and cajoled bondholders into footing part of the bill.

Deutsche Bank AG and Commerzbank AG, Germany’s biggest banks, lost 3.8 percent to 27.20 euros and 3.4 percent to 1.92 euros, respectively.

Deutsche Boerse AG, the operator of the Frankfurt exchange, declined 4.6 percent to 39.42 euros as the European Commission adopted a proposal for introducing a financial transaction tax.

Solar Companies

Q-Cells SE, a solar cell and module maker, slid 4.4 percent to 53.8 euro cents, while competitor Solarworld AG retreated 7.7 percent to 3.27 euros. Germany, the world’s biggest solar market, added 664 megawatts of panels in June, a 69 percent drop from the same period last year, according to preliminary figures released by the German power grid regulator Bundesnetzagentur.

SAP AG advanced 1.3 percent to 38.32 euros. The software maker has a “very well-filled contract pipeline” and “good results” will continue even as global economic growth is slowing, Finanz und Wirtschaft reported, citing an interview with Robert Enslin, head of global sales.

Dialog Semiconductor AG jumped 7.7 percent to 14.64 euros, the highest price in two months. The supplier of analog and digital circuits now predicts third-quarter sales of $137 million to $140 million, the company said. The previous forecast was for revenue of $131 million to $136 million.

Heidelberger Druckmaschinen AG climbed 1.7 percent to 1.60 euros, the highest in six weeks, as HSBC Holdings Plc upgraded the maker of printing presses to “neutral” from “underweight.”

--Editors: Srinivasan Sivabalan, Andrew Rummer

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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


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