Bloomberg News

German Stocks Decline After U.S. Payroll Report

July 06, 2012

German stocks dropped for a third day as a report showed that the U.S. economy created fewer jobs last month than economists had estimated.

Deutsche Bank AG (DBK) fell 4.7 percent after Reuters reported that Germany’s financial regulator Bafin was conducting a probe into interest-rate manipulation. SAP AG (SAP), the largest maker of business software, lost 4.4 percent after Berenberg Bank said information-technology companies may lower their earnings forecasts for the year.

The DAX Index (DAX) retreated 1.9 percent to 6,410.11 at the close of trade in Frankfurt. The gauge has still climbed 7.4 percent from its 2012 low on June 5 as Greece formed a new government and European Union leaders opened the door to directly recapitalizing lenders using the euro area’s permanent bailout fund. The broader HDAX Index also slid 1.9 percent today.

“The DAX reacted negatively to the disappointing U.S. data because the U.S. market is very important for German exporters,” said Daniel Zindstein, head of portfolio management at GECAM AG in Wangen, Germany. “The fewer people that have jobs in the U.S., the less they consume and buy German cars, consumer goods, building materials, flights, steel, sports goods and so on.”

In the U.S., payrolls rose 80,000 last month after climbing a revised 77,000 in May, a Labor Department report showed today. Economists had projected a 100,000 gain, according to the median estimate in a Bloomberg News survey. The unemployment rate remained at 8.2 percent. Private employment increased 84,000 in June, the weakest in 10 months.

Central Banks

The European Central Bank yesterday reduced its benchmark rate to a record low of 0.75 percent and cut its deposit rate to zero. Also yesterday, China lowered its borrowing costs and the Bank of England increased its asset-purchase program.

In Germany, a report from the Economy Ministry today showed that the country’s industrial output rebounded in May more than economists had forecast as construction buttressed Europe’s largest economy against the sovereign-debt crisis. Production rose 1.6 percent from April, the release said. Economists had forecast an increase of 0.2 percent, the median of 36 estimates in a Bloomberg News survey showed. Production was unchanged from a year earlier when adjusted for working days.

Carmakers Fall

Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, slipped 4.6 percent to 56.42 euros after Morgan Stanley downgraded the stock to equal weight, the equivalent of hold, from overweight.

Daimler AG (DAI), the third-largest maker of luxury cars, fell 3.3 percent to 35.34 euros. Volkswagen AG, Europe’s biggest carmaker, fell 2.7 percent to 130.9 euros. A gauge of automakers posted the biggest decline on the benchmark Stoxx Europe 600 Index. (SXXP)

Deutsche Bank AG fell 4.7 percent to 27.39 euros. Bafin is conducting a special probe into possible manipulation of London Interbank-Offered Rate, or Libor, Reuters reported, citing people familiar with the matter. The German regulator declined to comment specifically on whether it was probing Deutsche Bank, the news agency said.

Commerzbank AG (CBK), Germany’s second largest, bank declined 3.5 percent to 1.25 euros.

SAP lost 4.4 percent to 45.55 euros.

Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, gained 0.8 percent to 9.27 euros.

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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