Bloomberg News

Germany Stocks Slide, Trimming Weekly Gains; Volkswagen Falls

January 16, 2012

Jan. 13 (Bloomberg) -- German stocks retreated, trimming their weekly gains, after reports that several euro-region countries face imminent credit downgrades by Standard & Poor’s.

Bayerische Motoren Werke AG and Volkswagen AG led declines in carmakers. ThyssenKrupp AG and Salzgitter AG dropped with metal prices. SAP AG jumped 3.6 percent after reporting fourth- quarter sales and earnings that beat analysts’ estimates.

The benchmark DAX Index slid 0.6 percent to 6,143.08 at the close in Frankfurt, having previously advanced as much as 1.1 percent. The gauge still posted a fourth weekly advance, rising 1.4 percent, as the Federal Reserve confirmed the U.S. economy continues to grow and Spain and Italy sold debt at lower yields. The broader HDAX Index also dropped 0.6 percent today.

“If some countries are downgraded with a negative outlook it means there will be more uncertainty in the months ahead,” said Markus Huber, head of German sales trading at ETX Capital in London. “If rating agencies are indeed downgrading some countries today this will add oil to the fire.”

Dow Jones Newswires cited European Union sources for its report on the credit-rating reductions. S&P is stripping France of its AAA credit rating for the first time, Agence France- Presse reported, citing an unidentified government official.

Greek Talks

Talks between Greece and its creditor banks were put on hold after negotiations in Athens failed to yield an agreement. A proposal put forward by the steering committee representing financial firms has “not produced a constructive consolidated response by all parties,” the Institute of International Finance said today.

German stocks rose earlier following a report the European Banking Authority will postpone stress tests, while borrowing costs fell at an Italian debt auction. Italy sold 3 billion euros ($3.8 billion) of bonds maturing in 2014 to yield 4.83 percent, compared with 5.62 percent at the previous auction.

BMW, the world’s biggest maker of luxury cars, dropped 1.6 percent to 58.45 euros, while preferred shares of Volkswagen retreated 2.2 percent to 126 euros. Carmakers were the worst performers in the benchmark Stoxx Europe 600 Index, losing 1 percent as a group.

ThyssenKrupp and Salzgitter, Germany’s biggest steelmakers, lost 1.4 percent to 19.12 euros and 2.1 percent to 42 euros, respectively. Aluminum, copper, lead, nickel and zinc all retreated on the London Metal Exchange.

SAP, the largest maker of business-management software, surged 3.6 percent to 42.94 euros. Fourth-quarter revenue from software and related services climbed 12 percent to 3.72 billion euros under accounting standards SAP uses for its own forecasts, the Walldorf, Germany-based company said. That compared with the 3.6 billion-euro average estimate in a Bloomberg survey of analysts. Operating profit gained 10 percent, also topping projections. month high.

Commerzbank AG jumped 3.4 percent to 1.42 euros, the highest level in more than a month, after Handelsblatt reported Germany’s second-largest lender plans to raise its capital level without seeking government aid.

--Editors: Andrew Rummer, Srinivasan Sivabalan

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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