Bloomberg News

German Stocks Fall, Extending Biggest Quarterly Drop Since 2002

October 03, 2011

Oct. 3 (Bloomberg) -- German stocks fell, extending the benchmark DAX Index’s biggest quarterly drop in nine years, as concern deepened that Europe’s debt crisis will hurt growth and choke off funding for banks.

Commerzbank AG slid 7.3 percent and Deutsche Bank AG dropped 2.2 percent amid speculation that banks in Belgium and Austria will need more government support. Carmakers Bayerische Motoren Werke AG and Daimler AG declined as investors speculated that China’s economy is slowing more than expected.

The DAX dropped 2.3 percent to 5,376.7 at the 5:30 p.m. close in Frankfurt, having earlier fallen as much as 3.9 percent. The gauge slumped 25 percent last quarter, its largest plunge since 2002, amid concern global growth is stumbling as policy makers struggle to contain Europe’s sovereign-debt crisis. The DAX has decreased 22 percent this year. The broader HDAX Index lost 2.3 percent today.

“Clearly this ongoing negative news about the European crisis is doing nothing for sentiment,” said David Jones, chief market strategist at IG Index in London. “Any rally will be unsustainable because everyone is nervous. Traders and investors are asking themselves ‘when will this ever end?’”

Stocks kept losses even after a report from the Institute for Supply Management showed manufacturing in the U.S., the world’s largest economy, unexpectedly accelerated in September.

The Greek government said it passed a new budget backed by its international creditors, including larger deficits than previously forecast, as the country attempts to secure an 8 billion-euro ($10.6 billion) aid payout needed to avoid default.

Deutsche Bank, Dexia

Commerzbank, Germany’s second-largest bank, tumbled 7.3 percent to 1.76 euros. Deutsche Bank, the country’s biggest lender, fell 2.2 percent to 25.75 euros. Aareal Bank AG, a commercial-property lender, declined 6.3 percent to 11 euros. The Euro Stoxx Banks Index of euro-area lenders retreated 3.6 percent.

Dexia SA of Belgium slumped 10 percent after Les Echos newspaper reported the Belgian and French finance ministers planned to meet today to discuss financing options for the lender and Moody’s Investors Service said it may downgrade the bank’s operating units. Hypo Alpe-Adria-International Bank AG, which was nationalized by Austria, may cost Austrian taxpayers another 4 billion euros by 2013, Austrian daily newspaper Kronen-Zeitung reported.

BMW, maker of the X3 sport-utility vehicle, lost 5.7 percent to 47.12 euros. Daimler, the maker of Mercedes-Benz cars, sank 2.3 percent to 32.85 euros.

Hard Landing

In Asia, Hong Kong shares tumbled, with the Hang Seng Index falling 4.4 percent.

“We have sensed that the financial markets in China have become increasingly unstable and that the risk of a hard landing is rising,” a team of equity strategists at Bank of America Corp.’s Merrill Lynch unit in Hong Kong led by David Cui wrote in a report dated Oct. 1. “We believe that, to counter the effects of the latest global financial crisis, the government’s monetary policy was arguably too loose and fiscal policy too aggressive.”

Infineon Technologies AG, Europe’s second-largest semiconductor maker, dropped 3.5 percent to 5.39 euros. Aixtron AG, a supplier to the semiconductor industry, declined 4.8 percent to 10.44 euros. Tokyo Electron Ltd.’s second-quarter orders fell more than the Japanese semiconductor-equipment maker had predicted because of excess chip inventories, Chairman Tetsuro Higashi said.

--Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

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


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