Bloomberg News

German Stocks Decline as U.S. Manufacturing Contracts

September 04, 2012

German stocks declined for the first time in three days as a report showed U.S. manufacturing contracted for a third month in August, adding to signs of a global economic slowdown.

Bayerische Motoren Werke AG (BMW) slid 3.1 percent as Morgan Stanley said rival Daimler AG (DAI) has “more room to surprise.” Metro AG (MEO), Germany’s largest retailer, fell 1.7 percent after a report the shares may leave the benchmark DAX Index. Deutsche Post AG rose 0.7 percent as the Wall Street Journal said the company plans to sell a stake in Blue Dart Express Ltd.

The DAX lost 1.2 percent to 6,932.58 at the close of trading in Frankfurt. The measure has still rallied 16 percent from this year’s low on June 5 as European Central Bank President Mario Draghi said he would do everything possible to preserve the euro and speculation grew the Federal Reserve will announce a third round of bond purchases. The broader HDAX Index also retreated 1.2 percent today.

“A lot of investors see the European economy as very sluggish and when they see the U.S. economy also cooling down they get a little stressed and sell equities,” said Markus Wallner, an equity strategist at Commerzbank AG in Frankfurt. “Volumes are very low. A little news increases volatility.”

The number of shares changing hands in companies listed on the DAX was 24 percent lower than the 30-day average today, according to data compiled by Bloomberg.

The Institute for Supply Management’s U.S. manufacturing index fell to 49.6 in August from 49.8 a month earlier, the Tempe, Arizona-based group said today. Economists in a Bloomberg survey projected an August reading of 50, which is the dividing line between expansion and contraction. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

EU Outlook

The European Union’s credit outlook was cut by Moody’s Investors Service, reflecting the risks to Germany, France, the U.K. and the Netherlands that account for about 45 percent of the group’s budget revenue. The ratings company lowered the outlook on the EU’s Aaa long-term bond rating to negative from stable, according to a statement released late yesterday.

BMW fell 3.1 percent to 55.39 euros as Morgan Stanley said the the largest maker of luxury cars is priced to beat long-term guidance while Daimler has “simply more room to surprise,” as it is already discounting disappointment. Daimler shares offer better value over a two-year outlook, according to Morgan Stanley.

Daimler, the world’s third-largest luxury automaker, declined 2.2 percent to 37.77 euros.

Metro dropped 1.7 percent to 23.56 euros. The second- smallest stock in the DAX may be removed from the benchmark index in this week’s rebalancing, according to a report from Handelsblatt.

Kloeckner Falls

Kloeckner & Co. SE, Europe’s largest independent steel trader, retreated 1.3 percent to 7.13 euros after Jefferies Group Inc. gave the shares an underperform recommendation, with a price estimate of 6 euros.

Deutsche Boerse AG (DB1), the owner of the Frankfurt stock exchange, slipped 0.9 percent to 41 euros.

Deutsche Post rose 0.7 percent to 15.80 euros. Europe’s largest mail carrier plans to reduce its ownership of Blue Dart in order to comply with India’s minimum public-shareholding requirement, according to a report in the Journal.

Nordex SE (NDX1), a German wind-turbine maker, rose 2.4 percent to 3.30 euros as rival Vestas Wind Systems A/S was the second- biggest gainer in the Stoxx Europe 600 Index.

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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