Bloomberg News

German Stocks Fluctuate as Greek Voters Reject Austerity

May 07, 2012

German stocks fluctuated between gains and losses as Greek voters stripped the ruling coalition of its majority, igniting concern that the nation is more likely to default.

Bayerische Motoren Werke AG (BMW) advanced as April sales in China rose. Air Berlin Plc (AB1) slipped 1.2 percent after reporting lower passenger numbers. QSC AG (QSC) retreated 8.8 percent after posting earnings that missed analysts’ estimates.

The benchmark DAX (DAX) Index rose 0.1 percent to 6,569.48 at the close of trading in Frankfurt, after declining as much as 2.3 percent earlier. The broader HDAX Index added 0.2 percent today.

“In the near term, the Greek election is very damaging for stocks,” Markus Huber, head of German sales trading at ETX Capital in London, wrote in an e-mail. “Uncertainty rules again, not only as it makes a Greek euro exit more likely, but also will stifle any attempts for the Greek economy to stabilize.”

Greece’s political leaders struggled to find the support needed to form a coalition government after voters flocked to anti-bailout parties, calling into question the country’s ability to impose the measures needed to guarantee its future in the euro-area.

New Democracy led in the election, receiving 19 percent of the vote and 108 seats in the 300-seat Parliament. Syriza, a coalition of left parties which has vowed to cancel the bailout terms, got 17 percent to score 52 seats. Socialist Pasok, which partnered with New Democracy in securing a second rescue package for the country, trailed in third place with 41 seats.

Greek Bailout Terms

Under the terms of the 130 billion-euro ($169 billion) bailout from the European Union and International Monetary Fund, lenders expect to hear in June how Greece will achieve 11.6 billion euros of savings for 2013 and 2014.

In France, Francois Hollande defeated President Nicolas Sarkozy to become the first Socialist in 17 years to control Europe’s second-biggest economy. He pledged to push for less austerity and more growth in the region.

“Austerity is not inevitable,” he told supporters in Tulle, France, last night after he got about 52 percent against about 48 percent for Sarkozy.

Austerity measures aimed at stemming Europe’s turmoil have driven economies from the Netherlands to Spain back into recession, emboldening politicians campaigning for growth. The elections took place as 386 billion euros of emergency loan packages for Greece, Ireland and Portugal and a focus on deficit reduction failed to stem Europe’s sovereign-debt crisis.

German factory orders increased more than economists forecast in March, driven by demand from outside the euro area.

Orders, adjusted for seasonal swings and inflation, jumped 2.2 percent from February, when they gained a revised 0.6 percent, the Economy ministry in Berlin said today. Economists surveyed by Bloomberg had forecast an increase of 0.5 percent, according to the median of 30 estimates. From a year ago, orders dropped 1.3 percent when adjusted for work days.

BMW Gains

BMW added 1.5 percent to 70.05 euros. The world’s largest maker of luxury vehicles sold 27,197 BMW and Mini vehicles in China in April, a rise of 31 percent from a year ago, spokeswoman Linda Croissant said today by phone.

Deutsche Bank AG (DBK) and Commerzbank AG (CBK), the country’s largest lenders, rose 1.5 percent to 31.55 euros, and 3.2 percent to 1.58 euros, respectively.

Adidas AG (ADS), the world’s second-biggest sporting-goods maker, rose 1.9 percent to 62.86 euros.

Air Berlin slid 1.2 percent to 2 euros after saying passenger numbers in April dropped 4.3 percent to 2.66 million. Deutsche Lufthansa AG lost 1.6 percent to 9.40 euros. The stock was cut to hold from buy at Bankhaus Lampe KG.

QSC tumbled 8.8 percent to 1.74 euros, its lowest level since October 2010. The telecommunications company, based in Cologne, said first-quarter earnings before interest, taxes, depreciation and amortization dropped to 17.5 million euros, missing the 19.5 million-euro average estimate of three analysts compiled by Bloomberg.

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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