Bloomberg News

German Stocks Drop as Bundesbank Damps Speculation on ECB’s Role

December 12, 2011

Dec. 12 (Bloomberg) -- German stocks fell after Bundesbank President Jens Weidmann rejected an expanded role for the European Central Bank, highlighting fissures among euro-area policy makers that’ve delayed a solution to the debt crisis.

Deutsche Bank AG and Commerzbank AG paced declines among European lenders. EON AG, Germany’s biggest utility, retreated after Bank of America Corp. downgraded the stock. Infineon Technologies AG fell as Intel Corp. cut its fourth-quarter revenue forecast.

The benchmark DAX Index slid 3.4 percent to 5,785.43 at the close in Frankfurt. The measure dropped 1.6 percent last week as the ECB damped speculation it would boost debt purchases, overshadowing an agreement by the region’s leaders to step up measures to fight the debt crisis. The broader HDAX Index lost 3.2 percent today.

“Acting on Europe is dividing policy makers more than ever,” said Ansgar Krekeler, a sales analyst at WGZ-Bank AG in Dusseldorf, Germany. “The pace of political reforms depends largely on the pressure from financial markets.”

Weidmann, Germany’s top central banker, told the Frankfurter Allgemeine Sonntagszeitung that while a European agreement on Dec. 9 to limit budget deficits represents “progress,” the onus is on governments rather than the ECB to resolve the crisis.

Moody’s Review

Moody’s said it will review the ratings of all EU countries in the first quarter, saying the summit failed to deliver “decisive policy measures” to end the debt crisis.

Deutsche Bank and Commerzbank, Germany’s biggest banks, lost 5.5 percent to 27.97 euros and 7.8 percent to 1.22 euros, respectively. A gauge of banking shares on the Stoxx Europe 600 Index declined 3.9 percent.

EON fell 4.6 percent to 17 euros after Bank of America downgraded the shares to “neutral” from “buy,” citing political risk. Rival RWE AG lost 4.3 percent to 26.75 euros.

ThyssenKrupp AG, Germany’s biggest steelmaker, dropped 4.7 percent to 17.18 euros, while Salzgitter AG, the second largest, retreated 4.7 percent to 37.08 euros. Copper, lead, nickel, tin and zinc all retreated on the London Metal Exchange today.

Infineon, Europe’s second-biggest chipmaker, lost 2.4 percent to 5.74 euros. Competitor Intel said it now expects revenue to be $13.7 billion, plus or minus $300 million, compared with a previous estimate of $14.7 billion, give or take $500 million. Analysts had predicted $14.7 billion, the average of estimates compiled by Bloomberg.

Balda AG sank 5.5 percent to 3.12 euros, the lowest since August 2010, as shareholder Octavian Advisors called for an extraordinary general meeting to replace the current supervisory board.

-- Editors: Srinivasan Sivabalan, Andrew Rummer

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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