Bloomberg News

German Stocks Retreat Most in Eight Weeks on Greek Referendum

November 01, 2011

Nov. 1 (Bloomberg) -- German stocks tumbled the most in eight weeks as Greek Prime Minister George Papandreou called a referendum on the euro area’s revised bailout package, raising the prospect of a disorderly default if voters reject the deal.

Deutsche Bank AG and Commerzbank AG, Germany’s biggest lenders, plunged at least 8 percent. Daimler AG slid 5.9 percent after Barclays Plc downgraded the automaker.

The benchmark DAX Index declined 5 percent to 5,834.51 at the close in Frankfurt, the largest retreat since Sept. 5. The gauge has still jumped 15 percent from this year’s low on Sept. 12. The DAX rose 12 percent in Oct., its biggest monthly gain since April 2009, as investors speculated that the euro area’s revised plan would shore up banks’ balance sheets and insulate economies from a possible Greek default. The broader HDAX Index dropped 4.8 percent today.

“This is a serious vote of no confidence to the political system,” said Henrik Drusebjerg, who helps oversee $230 billion as senior strategist at Nordea Bank AB in Copenhagen. “It shows investors can’t trust political deals to hold up and suggests European politicians may be seriously out of sync with their populations. It would have been very helpful if Papandreou had sorted this out ahead of last week’s deal.”

Papandreou called a referendum on the euro area’s latest bailout package, saying voters will give him support to proceed with economic reforms. The gambit risks pushing Greece into default if voters reject the financial accord. The vote poses a threat to financial stability in the euro region and increases the risk of a “disorderly” default, Fitch Ratings said.

Falling Popularity

Papandreou’s popularity has declined after cutting pensions and wages and increasing taxes. Six senior members of the ruling party called on the prime minister to step down, state-run Athens News Agency reported, without citing anyone.

Deutsche Bank fell 8 percent to 27.93 euros and Commerzbank slid 9.4 percent to 1.62 euros, as a gauge of bank shares in the regional Stoxx Europe 600 Index retreated the most since August.

Daimler slipped 5.9 percent to 34.81 euros after Barclays downgraded the maker of Mercedes cars and trucks to “underweight” from “equal weight.” Bayerische Motoren Werke AG declined 4.2 percent to 56.58 euros and Volkswagen AG, Europe’s biggest carmaker, dropped 5.4 percent to 120 euros.

U.S., Chinese Economies

In the U.S., the Institute for Supply Management’s factory index fell to 50.8 in October from 51.6 the prior month. A reading of 50 is the dividing line between expansion and contraction. A Chinese manufacturing gauge dropped to the lowest level since February 2009.

Renewable-energy companies retreated as HSBC Holdings Plc downgraded Denmark’s Vestas Wind Systems A/S, the world’s biggest wind-turbine maker. Nordex SE, the German wind-turbine maker, plunged 9.3 percent to 4.07 euros. Solar-cell maker Solarworld AG fell 9.9 percent to 3.20 euros.

Wacker Chemie AG sank 5.7 percent to 68.95 euros as Commerzbank cut the second-biggest producer of solar-grade silicon to “hold” from “buy.”

--Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Peter Levring in Copenhagen at

To contact the editor responsible for this story: Andrew Rummer at

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