Bloomberg News

German Stocks Decline for a Third Day; Infineon, Carmakers Fall

November 16, 2011

Nov. 16 (Bloomberg) -- German stocks retreated for a third day as Infineon Technologies AG slumped and UniCredit SpA said it will ask the European Central Bank for permission to use a wider range of assets as collateral.

Infineon, Europe’s second-biggest semiconductor maker dropped 3 percent after forecasting lower fiscal 2012 sales. Bayerische Motoren Werke AG fell 3.2 percent, leading a gauge of carmakers lower as European sales declined. BASF SE, the world’s largest chemicals maker, declined 0.6 percent.

The DAX Index retreated 0.3 percent to 5,913.36 at the close in Frankfurt, after earlier rising as much as 1.6 percent and sliding as much as 1.4 percent. The gauge has fallen 21 percent from this year’s high on May 2 amid concern global economic growth is slowing and policy makers are struggling to contain Europe’s debt crisis. The broader HDAX Index lost 0.3 percent today.

“We need to see credible political and economical solutions soon before stocks can begin to climb again for real. Until then, markets will shift up and down aligned with political news,” said Torben Hoyer, the chief equity adviser at Nordea Private Banking in Copenhagen, in a note to clients.

Former Germany’s benchmark measure lost 1 percent yesterday as Mario Monti, named prime minister of Italy, struggled to get the country’s political parties to participate in his new Cabinet. Italian 10-year bonds rose above 7 percent and the extra yield investors demand to hold 10-year bonds from France, Belgium, Spain and Austria instead of benchmark German bunds all increased to euro-era records.

Monti was sworn in today at a ceremony in Rome presided over by President Giorgio Napolitano.

Stocks Resume Slide

German stocks erased earlier gains as a UniCredit spokesman said Chief Executive Officer Federico Ghizzoni will ask the ECB to widen the range of assets that lenders can offer as collateral.

Monti said he will be prime minister and finance minister in his new government. He concluded two days of talks with political leaders yesterday in a bid to gain broad support for a Cabinet tasked with pushing through an overhaul of the currency region’s third-biggest economy.

Chancellor Angela Merkel said that Germany is ready to cede some sovereignty to strengthen the euro area and restore confidence in the common currency.

Member states need to make changes to treaties to strengthen European Union institutions and enforce tighter budget rules, Merkel told reporters in Berlin today at a joint briefing with Irish Prime Minister Enda Kenny.

Infineon, BMW Fall

Infineon slipped 3 percent to 6.26 euros after it forecast a steeper decline in sales than analysts had projected. Revenue in the year through September 2012 will fall by a “mid-single- digit percentage,” the company said today. That compared with the average of 23 analyst estimates compiled by Bloomberg for a 1.8 percent drop.

BMW retreated 3.2 percent to 55.71 euros, leading a gauge of carmakers to drop the most of the 19 industries on the Stoxx 600. European car sales dropped as the region’s economic confidence fell. Daimler AG, whose Mercedes-Benz division is the world’s third-biggest luxury-vehicle maker, declined 0.9 percent to 32.23 euros.

Registrations dropped 1.4 percent to 1.04 million vehicles from 1.06 million units a year earlier, the Brussels-based European Automobile Manufacturers Association, or ACEA, said today in a statement. Growth in Germany, Europe’s largest car market, accounting for almost one in four cars sold in the region, slowed to 0.6 percent.

BASF declined 0.6 percent to 50.58 euros after Berenberg Bank predicted that the shares of chemical makers such as BASF and Lanxess AG will drop and brokerages will cut their ratings on the stocks. Lanxess slid 1.1 percent to 40.10 euros.

--Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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