Bloomberg News

German Stocks Slide for Second Day; Commerzbank, SGL Carbon Drop

December 20, 2011

Dec. 19 (Bloomberg) -- German stocks fell as European Central Bank President Mario Draghi said the euro area faces “high uncertainty,” overshadowing policy makers’ discussion of channeling additional financial support for the region through the International Monetary Fund.

Deutsche Bank AG and Commerzbank AG, the nation’s biggest lenders, declined. SGL Carbon SE tumbled 9.5 percent after a report it regards a takeover by Bayerische Motoren Werke AG as unlikely.

The DAX Index fell 31.07, or 0.5 percent, to 5,670.71 at the close in Frankfurt, its second day of losses. The benchmark measure has retreated 18 percent this year amid concern the debt crisis will derail the global economic recovery. The broader HDAX Index dropped 0.5 percent today.

“Financial market tensions are continuing to dampen economic growth,” Draghi told lawmakers in Brussels today. The economy “should recover, albeit very gradually, in the course of 2012. Substantial downside risks to the economic outlook nevertheless remain.”

Euro-area finance ministers held a conference call today to discuss funneling 200 billion euros ($260 billion) in additional funding through the IMF and the mechanics of the so-called fiscal compact that were agreed in the Dec. 9 European Union summit accord, according to two people familiar with the matter.

Christmas Present

“The chances of authorities delivering an early Christmas present in the shape of a euro crisis solution looks to be slim, with just a finance ministers’ conference call on the fiscal pact this week,” Victoria Cadman and Philip Shaw, analysts at Investec Plc, wrote in a report today. “Instead, attention will be focused on whether the German economy continues to expand, with the Ifo survey set for release.”

The Munich-based Ifo institute is due to publish its business climate index for December tomorrow. German economic growth will rebound in 2013 after slumping next year as the euro region’s sovereign debt crisis gradually abates, the Bundesbank said in its monthly report today.

“The German economy could in the course of next year return to a solid growth path, supported by an expansive monetary policy and a more strongly-growing world economy,” the Bundesbank said. “This forecast assumes that there is no further significant worsening in the sovereign debt crisis.”

France Rating

Fitch Ratings lowered France’s credit outlook and put the grades of nations including Spain and Italy on review for a downgrade, citing Europe’s failure to find a “comprehensive solution” to the debt crisis. Fitch placed Spain, Italy, Belgium, Slovenia, Ireland and Cyprus on a “Rating Watch Negative” review, which it expects to complete by the end of January, according to a statement.

Deutsche Bank declined 0.7 percent to 27.17 euros and Commerzbank slid 2.2 percent to 1.27 euros.

SGL Carbon fell 9.5 percent to 40.99 euros after Chief Financial Officer Juergen Muth told the Frankfurter Allgemeine Sonntagszeitung that the German maker of carbon and graphite products regards a takeover by BMW and the carmaker’s heiress Susanne Klatten as unlikely. BMW and Klatten together hold about 44 percent in SGL.

Suedzucker AG gained 5.1 percent to 24.42 euros after Goldman Sachs Group Inc. raised the shares to “buy” from “neutral.” TUI AG, the German owner of Europe’s largest travel company, added 1.9 percent to 4.57 euros after it was raised to “outperform” from “neutral” at Exane BNP Paribas.

Air Berlin Plc surged 8.3 percent to 2.50 euros after the carrier said Etihad Airways, Abu Dhabi’s state-controlled airline, will pay 72.9 million euros to increase its holding in the German company to 29.2 percent.

Etihad will purchase 31.6 million new shares at the Dec. 16 closing price of 2.31 euros a piece, Air Berlin said in a statement today. Etihad, which already owned 2.99 percent of Air Berlin, will keep the stake for at least two years and not increase its holding during that time.

--Editor: Andrew Rummer

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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


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