Bloomberg News

German Stocks Decline as Cyprus Debates Bailout Plan

March 22, 2013

German stocks declined for a second day as business confidence unexpectedly fell and Cypriot lawmakers struggled to raise 5.8 billion euros ($7.5 billion) needed to win a European bailout.

MAN AG sank the most in almost eight months after Volkswagen AG made a low-ball initial offer as it pushes for full control of the truckmaker. BASF AG, the world’s biggest chemical maker, dropped 0.6 percent. Adidas AG (ADS), the second- largest producer of sporting goods, gained 0.6 percent as U.S. rival Nike Inc. reported an increase in orders from China and a rebound in profit margins.

The DAX Index (DAX) retreated 0.2 percent to 7,916.26 at 10:37 a.m. in Frankfurt. The gauge has fallen 1.6 percent this week, on course for the largest decline since Feb. 8, as euro-area ministers proposed a levy on Cyprus bank deposits to help pay for the nation’s rescue package. The broader HDAX Index lost 0.3 percent today.

“Enduring discussions about possible measures for Cyprus instead of a solution have led to continued uncertainty in the markets,” Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in an e-mail.

The DAX has still risen 4 percent this year as reports pointed to a strengthening global economy amid speculation that central banks will maintain stimulus measures.

Cypriot lawmakers will begin a debate today on legislation to unlock bailout funds. The European Central Bank has said it will cut emergency funds for the island nation’s lenders after March 25 unless it agrees on a bailout with international creditors. Euro-area finance ministers expect a proposal from Cyprus “as rapidly as possible” to raise the 5.8 billion euros needed to trigger the emergency loans, they said in a statement late yesterday.

Business Confidence

In Germany, business confidence unexpectedly fell from a 10-month high amid the Cypriot crisis. The Ifo institute’s business climate index, based on a survey of 7,000 executives, declined to 106.7 this month from 107.4 in February. Economists had predicted a gain to 107.8, according to the median of 42 forecasts in a Bloomberg survey.

MAN lost 4.4 percent to 83.28 euros, the largest decline since July 26. Volkswagen, which already owns 75.03 percent of the Munich-based company’s voting rights, will offer 80.89 euros apiece for the rest of the shares.

Preferred stock of VW, Europe’s largest carmaker, advanced 1.4 percent to 157.40 euros, snapping a six-day slide.

BASF slipped 0.6 percent to 70.89 euros. The shares have retreated 5.6 percent this week for the biggest drop in 10 months.

Lanxess Slips

Lanxess AG (LXS), the German chemical maker that joined the DAX in September, declined 2.6 percent to 56.81 euros as Bank of America Corp. downgraded the shares to neutral from buy, and reduced 2013 earnings estimates by 45 percent.

Adidas advanced 0.6 percent to 78.61 euros, snapping three days of losses, as Nike reported third-quarter profit that topped analysts’ estimates. Nike’s gross margin widened for the first time in nine quarters and orders for its branded goods in China, excluding changes in currency exchange rates, gained.

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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