Bloomberg News

German Stocks Decline as Japanese Trade Deficit Widens

August 22, 2012

German stocks declined as Japan reported a wider-than-expected trade deficit and investors waited for meetings of euro-area leaders that may determine whether Greece gets any concessions on the terms of its bailout.

Commerzbank AG (CBK) lost 1.5 percent after Die Zeit reported that the lender may have to pay costs from possible violations of U.S. sanctions. Paragon AG (PGN) advanced 2.1 percent after reporting a 13 percent increase in first-half revenue.

The DAX Index (DAX) dropped 1 percent to 7,017.75 at the close in Frankfurt, its biggest slide since Aug. 2. The gauge has still rallied 17 percent from this year’s low on June 5 as European Central Bank President Mario Draghi said he would preserve the euro. The broader HDAX Index also fell 1 percent today.

“The recent slow grind higher in stocks is a good reason for profit taking on a morning where Japan’s trade deficit is highlighting European import weakness,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich.

German stocks climbed yesterday to a five-month high as Spain’s borrowing costs fell at an auction of 12-month and 18- month debt.

In Athens, Luxembourg Prime Minister Jean-Claude Juncker, who also heads the group of euro-area finance ministers, visits Greek Prime Minister Antonis Samaras to listen to a request for a two-year extension to the country’s fiscal-adjustment program. Juncker said the group won’t reach any decision about Greek aid before a meeting in October.

“We’re waiting for the troika report” on Greece’s progress in cutting spending and increasing revenue from taxes, Juncker told RTL Television Luxembourg in an interview posted on the government’s website.

Hollande, Merkel

French President Francois Hollande and German Chancellor Angela Merkel meet in Berlin tomorrow.

If Samaras shows a willingness to meet the main targets of his country’s second bailout, the other governments in the currency zone may agree to minor concessions, a senior lawmaker with Merkel’s government said yesterday.

Japan had a trade deficit of 517.4 billion yen ($6.5 billion) in July as the euro area’s sovereign-debt crisis and a slowdown in China dragged down exports, a report from the country’s Finance Ministry showed. That compared with a 60.3 billion yen surplus in June and a 270 billion yen forecast deficit in a Bloomberg News survey of 28 analysts.

In the U.S. a report from the National Association of Realtors showed that sales of existing homes rose 2.3 percent in July to a 4.47 million annual rate. That missed the median forecast of 73 economists surveyed by Bloomberg News for an increase to a 4.51 million pace last month.

A Commerce Department report on Aug. 24 may show that durable-goods orders increased 2.5 percent, the most this year, economists projected.

Commerzbank, Hochtief

Commerzbank lost 1.5 percent to 1.27 euros. Germany’s second-biggest lender predicts that costs from possible violations of U.S. sanctions may exceed its funds earmarked for the purpose. The newspaper cited filings by the bank.

Hochtief AG (HOT), Germany’s largest builder, declined 2.7 percent to 39.36 euros. A gauge of construction and materials companies slid 1.9 percent.

Salzgitter AG (SZG), the second-largest German steelmaker, fell 2.9 percent to 31.89 euros.

Paragon, a German maker of sensors for cars, buildings and industrial machines, advanced 2.1 percent to 8.90 euros, gaining for a fourth day. First-half revenue rose 13 percent to 37.6 million euros ($46.9 million).

The volume of shares changing hands on DAX companies was 12 percent lower than the average of the past 30 days, data compiled by Bloomberg showed.

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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