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German stocks fell for the first day in four, pulling the DAX Index (DAX) down from the highest level in almost two months.
EON AG dropped 1.6 percent after JPMorgan Chase & Co. and Citigroup Inc. cut their recommendations on the shares. Linde AG (LIN) fell 1.3 percent after Credit Suisse Group AG lowered its rating on the stock. Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s biggest lenders, retreated at least 1 percent each.
The DAX Index fell 0.2 percent to 6,564.80 at the close in Frankfurt, as investors await an interest-rate decision by the European Central Bank and a U.S. report on payrolls later this week. The gauge has gained 10 percent from its 2012 low on June 5 as Greece formed a new government and European leaders agreed to address flaws in their bailout programs. The broader HDAX Index lost 0.1 percent today. U.S. equity markets are closed for the Independence Day holiday.
“Investors have spent the first half of this week eagerly looking forward to the final two days, when central bank meetings and non-farm payrolls will provide plenty of excitement,” said Rupert Osborne, a futures trader at IG Index in London. “Caution predominates over the U.S. Independence Day holiday.”
The ECB and the Bank of England will announce interest-rate decisions tomorrow. ECB officials will lower their benchmark rate by 25 basis points to a record low 0.75 percent, according to the median forecast in a Bloomberg survey of 62 economists. Five predict a cut of 50 basis points and 11 forecast no change.
Services and manufacturing output shrank in June for a fifth month in the euro area and services unexpectedly contracted in Germany, adding to signs of a deepening economic slump in the second quarter.
A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area rose to 46.4 from May, London-based Markit Economics said today. That’s above an initial estimate of 46 published on June 21. In Germany, a gauge of service industries dropped to 49.9, below an estimate of 50.3. A reading below 50 indicates contraction.
EON lost 1.6 percent to 16.92 euros after JPMorgan cut its recommendation on the shares to neutral from overweight after recent gains, and Citigroup reduced its rating to sell. Germany’s largest utility, which has climbed 15 percent in the past month, increased its profit outlook yesterday after reaching a deal with Russia’s OAO Gazprom on natural-gas prices.
Linde retreated 1.3 percent to 120.40 euros after Credit Suisse cut its rating on the shares to neutral from outperform, saying the company’s acquisition of Lincare Holdings Inc. for $3.8 billion increases operational risks and may lead to pricing cuts in the next phase of competitive bidding for U.S. government-funded home care contracts.
Deutsche Bank slid 1.2 percent to 29.21 euros and Commerzbank slipped 3.1 percent to 1.33 euros. A gauge of banks listed on the Stoxx Europe 600 Index slid 0.5 percent.
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