Bloomberg News

German Stocks Decline; Volkswagen, Daimler, Deutsche Lufthansa Retreat

February 27, 2012

Most German stocks declined, erasing last week’s advance as the Group of 20 nations rejected the euro area’s call to increase International Monetary Fund resources.

Volkswagen AG (VOW) and rival automakers dropped on a report that China’s government plans to stop buying foreign cars. Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, slipped after canceling flights.

The DAX Index (DAX) decreased 14.83, or 0.2 percent, to 6,849.60 at the close in Frankfurt. The index has still gained 16 percent so far this year as euro-area leaders took measures to contain the region’s debt crisis and as U.S. economic data exceeded estimates. The broader HDAX Index lost 0.3 percent.

“All of the good news is known and now we’re starting to see negative economic and political news,” said Yves Maillot, the head of investments at Robeco Gestions in Paris, who helps oversee $6.8 billion. “In Europe, there is opposition to the aid package. There is an ensemble of elements that makes the market hard to handle.”

G-20 officials told the euro area’s political leaders to provide more financial firepower before they would consider lending outside support, putting the funding onus on Germany, already the biggest national contributor to the bailouts.

Germany went to the Mexico meetings of finance ministers and central bankers urging G-20 nations to find additional money for the IMF that could be channeled to the euro area.

IMF Managing Director Christine Lagarde, who attended the talks, said she wants to increase the fund’s lending capacity by $500 billion so that it can fend off “further shocks” to the global economy.

German Vote

Germany’s lower house of parliament approved a second euro region Greek bailout package worth 130 billion euros ($174 billion). The Bundestag voted 496 in favor of the measure; 90 voted against, while 5 abstained in Berlin today.

Chancellor Angela Merkel’s government must decide whether to back plans at a March 1-2 European Union summit to combine rescue funds and produce a potential firewall of 750 billion euros.

Before today’s vote, Merkel said there’s no guarantee that Greece’s second bailout will work as she urged lawmakers to approve the rescue while pushing back against an increase in euro firewall funds.

Automakers Fall

Volkswagen’s (VOW) preferred shares lost 0.7 percent to 138.35 euros. China’s government plans to stop buying cars from Volkswagen’s Audi and other foreign brands, threatening to lock them out of an estimated $13 billion segment of the world’s biggest vehicle market.

All 412 models approved for purchase by state agencies this year will be Chinese brands, according to a proposal disclosed by the Ministry of Industry and Information Technology last week. The preliminary list is open for public consultation until March 9, according to the ministry.

Bayerische Motoren Werke AG (BMW), the world’s largest maker of luxury vehicles, retreated 1.8 percent to 69.04 euros. Daimler AG (DAI), the third-biggest maker of luxury cars, declined 2.9 percent to 46.09 euros.

Porsche SE’s preferred shares gained 3.1 percent to 50.07 euros after people familiar with Volkswagen’s plan to buy the rest of the sportscar maker’s automotive business said the deal is almost done.

Lufthansa Declines

Lufthansa (LHA) slid 2.4 percent to 10.17 euros, its lowest price in more than a month. The airline canceled 140 of today’s flights as Frankfurt Airport’s ground controllers resumed strike action following the failure of talks over pay and the outsourcing of contracts.

KUKA AG (KU2), which manufactures production equipment, sank 2.7 percent to 16.90 euros. The stock was cut to “hold” (KU2) from “buy” at Berenberg Bank Schweiz AG.

Merck KGaA (MRK), a maker of drugs and chemicals, retreated 2.6 percent to 77.43 euros. Kepler Capital Markets SA and Equinet Bank AG both cut the shares to “reduce” from “hold.”

Wirecard AG (WDI), which offers Internet payment and processing services, gained 3.4 percent to 14.77 euros. Barclays Plc forecast a three-year earnings-per-share compound annual growth rate close to 20 percent and reiterated its “overweight” recommendation on the stock.

Aixtron SE, which makes equipment for the semiconductor industry, slid 3.6 percent to 12.26 euros after Deutsche Bank AG reduced its 2012 earnings before interest and taxes forecast.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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