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German stocks dropped for a second day as an unexpected increase in unemployment in Europe’s largest economy outweighed reports showing manufacturing expanded in the U.S. and China.
Deutsche Bank AG and Commerzbank AG (CBK) each fell at least 2.5 percent as southern European bonds dropped. MAN SE (MAN) and BASF SE (BAS) also declined. HeidelbergCement AG (HEI) rose after analysts recommended buying its shares.
The benchmark DAX (DAX) Index declined 0.8 percent to 6,710.77 at the close in Frankfurt, erasing an earlier rally of as much as 1.7 percent. The benchmark measure was closed yesterday for the May Day public holiday. The DAX has still gained 14 percent this year as investors speculated that companies in Germany will fare better than those in the euro area’s most indebted nations. The broader HDAX Index slipped 0.6 percent today.
“Some of the recent reports show Germany is now slowing probably in reaction to the slowdown in Europe,” said Neil Dwane, chief investment officer for Europe at RCM Ltd., in a phone interview.
German unemployment unexpectedly rose in April. The number of people out of work increased a seasonally adjusted 19,000 to 2.87 million, the Nuremberg-based Federal Labor Agency said today. Economists had forecast a decline of 10,000, the median of 34 estimates in a Bloomberg News survey showed. The adjusted jobless rate was 6.8 percent.
A gauge of Chinese manufacturing from HSBC Holdings Plc and Markit Economics rose in April. A separate release yesterday from China’s statistics bureau and logistics federation indicated that industry expanded at the fastest pace in a year. Manufacturing in the U.S. grew in April at the fastest rate in almost a year, a release from the Institute for Supply Management showed yesterday.
Deutsche Bank, Germany’s biggest lender, dropped 2.5 percent to 32.06 euros. Commerzbank slipped 2.5 percent to 1.60 euros. The yield on German two-, five-, 10-, and 30-year securities fell to record lows as concern resurfaced that some European nations will struggle to finance their debt at elevated borrowing costs. Spanish and Italian 10-year yields rose.
Portugal sold 1.5 billion euros ($2 billion) of bills in an auction today with investors demanding higher interest rates to purchase the debt.
MAN, the German truckmaker controlled by Volkswagen AG, slid 2.1 percent to 93.46 euros. BASF, the world’s largest chemical maker, declined 1.4 percent to 61.31 euros.
HeidelbergCement, Europe’s third-largest cement maker, rose 2.5 percent to 42.58 euros. Sanford C. Bernstein & Co. reiterated an outperform, or buy, recommendation on the shares before the company reports its results tomorrow.
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