Bloomberg News

German Stocks Little Changed as U.S. Budget Talks Falter

December 20, 2012

German stocks were little changed at their highest in nearly four years, amid concern that U.S. President Barack Obama and Republicans won’t agree a budget before the end of the year.

ThyssenKrupp AG (TKA) fell 1.8 percent as state-owned railway Deutsche Bahn AG filed a lawsuit against a group including the steelmaker. Commerzbank AG, Germany’s second-largest lender, retreated 0.8 percent. TUI AG (TUI1) rose 1.4 percent.

The DAX added 0.1 percent to 7,672.1 at the close of trading in Frankfurt, its highest level since January 2008. The gauge has rallied 29 percent from its low on June 5 as central banks announced asset-purchase programs, and speculation grew that U.S. lawmakers would agree a budget to avoid the so-called fiscal cliff of automatic tax increases and spending cuts totalling $607 billion due to come into effect next year. The broader HDAX Index was little changed today.

“We see a slightly negative market today, following the U.S. close due to the tactical statements on the fiscal cliff negotiations.” Guillermo Hernandez Sampere, head of trading at Fpm Frankfurt Performance Mgmt AG, who helps manage about 500 million euros ($659 million), wrote in a message. “We see rather low volumes, which is quite normal for this time of year.”

The volume of shares changing hands on the DAX (DAX) was 20 percent lower than the average of the last 30 days, data compiled by Bloomberg show.

Talks Deteriorate

Officials from President Barack Obama’s administration told leaders of business and financial services groups that negotiations with House Speaker John Boehner have deteriorated, according to a person familiar with the meeting.

The officials told the group of industry representatives at the White House that Republican plans to move forward with Boehner’s alternative proposal on taxes and spending risk pushing the government past the deadline, said the person, who asked for anonymity to discuss the private talks.

The U.S. economy grew at a 3.1 percent annual rate in the third quarter, more than previously reported. The revised gross domestic product reading exceeded the highest projection in a Bloomberg survey and compared with a previously estimated 2.7 percent gain, according to Commerce Department figures released today in Washington. The median estimate of economists called for a 2.8 percent advance.

U.S. Jobless

The number of Americans filing first-time claims for unemployment insurance payments rose for the first time in five weeks. Applications for jobless benefits increased by 17,000 to 361,000 in the week ended Dec. 15, Labor Department figures showed today. Economists forecast 360,000 claims, according to the Bloomberg survey median.

ThyssenKrupp dropped 1.8 percent to 18.24 euros. Germany’s largest steelmaker, Vossloh AG and Moravia Steel were sued for damages by Deutsche Bahn for fixing the prices for rails.

Deutsche Bahn filed a suit at the Frankfurt Regional Court after settlement talks failed, the railway said in an e-mailed statement today. The court confirmed the suit and said Deutsche Bahn valued the claims at 550 million euros ($730 million).

ThyssenKrupp hasn’t yet received the complaint, the company said in an e-mailed statement. It’s still in talks with Deutsche Bahn over the issue and there was no need to file a suit, it said.

Commerzbank, Germany’s second-largest lender, slid 0.8 percent to 1.49 euros. Deutsche Bank, the biggest, fell 0.5 percent to 33.54 euros.

Infineon Technologies AG (IFX), Europe’s second-largest semiconductor manufacturer, lost 1.2 percent to 6.19 euros. A gauge of technology stocks fell the second most of the 19 industry groups in the Stoxx Europe 600 Index. (SXXP)

Kloeckner & Co. SE, Europe’s largest independent steel trader, advanced 2.8 percent to 9.29 euros.

TUI, the owner of Europe’s largest travel company, rose 1.4 percent to 8.06 euros as a measure of travel and leisure stocks climbed on the Stoxx 600.

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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