Bloomberg News

German Stocks Fall as ECB Balance Sheet Rises to Record on Loans

December 28, 2011

Dec. 28 (Bloomberg) -- German stocks retreated, with the benchmark DAX Index snapping three days of gains, as the European Central Bank’s balance sheet expanded to a record after it lent financial institutions more money last week.

Deutsche Bank AG and Commerzbank AG, the nation’s biggest lenders, declined more than 3.5 percent. Bayerische Motoren Werke AG and Daimler AG followed a selloff in European carmakers. ThyssenKrupp AG and Salzgitter AG dropped with metal prices.

The DAX Index slid 2 percent to 5,771.27 at the close in Frankfurt. The benchmark gauge is headed for a 17 percent loss this year, its biggest drop since 2008, as euro-area leaders struggle to contain the region’s debt crisis. The broader HDAX Index tumbled 1.8 percent today.

Lending to euro-area banks jumped by 214 billion euros ($280 billion) to 879 billion euros in the week ended Dec. 23, the Frankfurt-based ECB said today. Its balance sheet increased 239 billion euros to 2.73 trillion euros, it said.

“The trading volume is very low so you can move the market easily,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “Maybe someone used the ECB statement to move the market but the statement is not very new.”

German stocks were little changed earlier as Italy sold 9 billion euros of six-month Treasury bills at half the yield it agreed to pay at an auction last month. The Rome-based Treasury auctioned the 179-day bills at a rate of 3.251 percent, down from 6.504 percent on Nov. 25. Demand was 1.7 times the amount for sale, compared with 1.47 times last month.

Italy also sold 1.733 billion euros of 2013 notes to yield 4.853 percent, compared with a yield of 7.814 percent at the last auction on Nov. 25. Tomorrow, the nation will auction four different securities, including a 10-year bond.

Deutsche Bank and Commerzbank lost 3.8 percent to 28.63 euros and 4.2 percent to 1.27 euros, respectively.

Luxury carmaker BMW fell 3.3 percent to 51.10 euros, while competitor Daimler dropped 3.9 percent, to 33.07 euros. Automakers were the worst performers in the benchmark Stoxx Europe 600 Index today, losing 3 percent as a group.

ThyssenKrupp and Salzgitter, Germany’s biggest steelmakers, tumbled 2.5 percent to 17.51 euros and 2.6 percent to 37.90 euros, respectively. Copper, lead, nickel, tin and zinc all fell on the London Metal Exchange today.

--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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