Bloomberg News

German Stocks Fall as China Output Slows; BMW Declines

June 01, 2012

German stocks declined for a third day as manufacturing growth slowed in China, unemployment in the single currency area reached a record and American employers in May added the fewest workers in a year.

Bayerische Motoren Werke AG (BMW) dropped 3.9 percent after the world’s largest luxury carmaker said Germany’s car market won’t grow in 2012. Infineon Technologies AG slid 5.7 percent. MAN SE jumped 2.2 percent after its parent company, Volkswagen AG (VOW), said it was forging a truckmaking alliance.

The DAX Index (DAX) dropped 3.4 percent to 6,050.29 at the close of trade in Frankfurt. The benchmark gauge lost 7.4 percent in May amid growing concern that Greece will be forced to leave the euro area and Spanish banks will seek bailouts. The broader HDAX Index also retreated 3.3 percent.

“The weak data from China is one of the main themes of the moment,” said Mikkel Kirkegaard Petersen, a senior equity specialist at Nordea Private Bank in Copenhagen. “Today’s numbers have not made us more confident and investors are selling because of this. The biggest part of the German car industry’s growth comes from China and they will get hammered if China growth recedes.”

China’s purchasing managers’ index expanded at the weakest pace since December last month, falling to 50.4 from 53.3 in April, the statistics bureau and logistics federation said today in Beijing. This compares with the 52 median estimate in a Bloomberg News survey of 27 economists. A reading above 50 indicates expansion.

A separate gauge from HSBC Holdings Plc and Markit Economics showed a seventh straight contraction, the longest since the global financial crisis.

Euro-Area Unemployment

Euro-area unemployment reached the highest on record as a deepening economic slump and budget cuts prompted companies from Spain to Italy to cut jobs. The jobless rate was at 11 percent in April and March, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995 and in line with the median forecast of 28 economists in a Bloomberg survey. The March figure was revised up to 11 percent from 10.9 percent.

Euro-region manufacturing output contracted for a 10th month in May as the economy struggled to regain strength amid the deepening debt crisis.

A gauge of manufacturing in the 17-nation euro area fell to 45.1 from 45.9 in April, London-based Markit Economics said today. That’s the lowest since mid-2009. It had previously reported the May output indicator at 45. A reading below 50 indicates contraction.

U.S. Hiring

Employers in the world’s biggest economy added the smallest number of workers in a year in May and the unemployment rate unexpectedly increased as job-seekers re-entered the workforce, further evidence that the labor-market recovery is stalling.

Payrolls climbed by 69,000 last month, less than the most- pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated, U.S. Labor Department figures showed today in Washington. The median estimate called for a 150,000 May advance. The jobless rate rose to 8.2 percent from 8.1 percent, while hours worked declined.

Manufacturing in the U.S. grew at a slower pace in May as factories tempered production and pared inventories in response to weakness in the global economy.

The Institute for Supply Management’s factory index fell to 53.5 after reaching a 10-month high of 54.8 in April, the Tempe, Arizona-based group reported today. Readings greater than 50 signal growth. The median projection of economists surveyed by Bloomberg News called for a decrease to 53.8 in May.

Carmakers Fall

BMW retreated 3.9 percent to 58.72 euros after it said Germany’s car market won’t grow in 2012 following a jump in 2011. “Last year was an exceptionally positive year for us in Germany,” said Karsten Engel, the carmaker’s head of sales and marketing in Germany.

Volkswagen dropped 4.1 percent to 123.75 euros. Europe’s largest carmaker will appoint a new trucks chief, add an executive to oversee China and replace three members of Audi’s board as part of a management shakeup to push forward with growth plans, according to people familiar with the matter.

Daimler AG (DAI) fell 5.1 percent to 35.52 euros after it was cut from sell to buy at Bankhaus Metzler in Frankfurt by equity analyst Juergen Pieper.

Infineon (IFX), Europe’s second-largest semiconductor maker, declined 5.7 percent to 6.03 euros, its lowest price this year.

Deutsche Bank Drops

Deutsche Bank AG (DBK) fell 4.2 percent to 27.15 euros. Germany’s largest lender borrowed 9 billion euros ($11.1 billion) from the European Central Bank through its Spanish and Italian units after saying it took only “a small amount” in a second round of emergency funding.

Deutsche Bank SA Espanola, the lender’s Spanish unit, took 5.5 billion euros and Deutsche Bank SpA, the Italian arm, borrowed 3.5 billion euros in the ECB’s second longer-term refinancing operation in February, according to annual reports filed by the two divisions.

Deutsche Bank said it named a new 15-member executive committee for its investment bank after Anshu Jain, the sole head of the unit since 2010, moved up to become co-chief executive officer with Germany head Juergen Fitschen.

Commerzbank AG (CBK), Germany’s second-biggest lender, fell 2 percent to 1.31 euros.

MAN rose 2.2 percent to 79.07 euros after Volkswagen’s decision to strengthen ties with the truckmaker and Scania.

“MAN has been driven up today by the news that VW will make crucial decisions in the personnel for the integrated commercial vehicle group,” said Helena Wuestenfeld, an analyst at Bankhaus Metzler in Frankfurt.

Scania AB Chief Executive Officer Leif Oestling will join Volkswagen’s management board to help coordinate synergies between the truckmaking operations.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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


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