Bloomberg News

German Stocks Decline, Snapping Two Days of Gains; RWE Retreats

June 11, 2013

German stocks declined, snapping two days of gains, as a federal court began hearings on the European Central Bank’s bond-buying plan.

RWE AG fell 0.9 percent after people familiar with the matter said the utility is having trouble selling its oil and gas unit. Daimler AG led automakers lower. Infineon Technologies AG added 2.3 percent after Citigroup Inc. upgraded the stock.

The DAX Index (DAX) slid 0.7 percent to 8,247.18 at 9:43 a.m. in Frankfurt. German stocks rose 0.6 percent yesterday as data showed the Japanese economy grew more than initially forecast. The broader HDAX Index also fell 0.7 percent today.

The volume of shares changing hands in companies listed on the DAX was 15 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

Germany’s top court will begin a two-day hearing today to address the ECB’s Outright Monetary Transactions program and the European Stability Mechanism.

The Federal Constitutional Court in Karlsruhe is reviewing the OMT, which was introduced last year as concerns peaked that the euro region would break apart, after plaintiffs including a lawmaker allied to Chancellor Angela Merkel brought a case against it. The as-yet-unused OMT foresees potentially unlimited purchases of bonds of debt-stricken countries that sign up to adjustment programs.

The court last year allowed Germany to ratify the 500 billion-euro ($663 billion) ESM bailout facility and the EU fiscal pact, while ruling the measures must include provisions that the country won’t be forced to assume higher liabilities without its consent. The September ruling was preliminary and didn’t cover the OMT bond program.

RWE Declines

RWE lost 0.9 percent to 25.97 euros. Germany’s second-largest utility is struggling to find buyers for its Dea oil-and-gas unit, three people with knowledge of the matter said. The company may have to accept a lower price than the 4.5 billion euros to 5 billion euros it initially sought if it proceeds with a sale of the entire division, the people said.

So far, only BASF SE’s energy unit Wintershall has expressed serious interest in buying all of Dea, two of the people said, asking not to be identified because the talks are private.

Daimler, the world’s third-biggest maker of luxury vehicles, fell 1.4 percent to 48.20 euros. Bayerische Motoren Werke AG, the biggest manufacturer of luxury cars, retreated 1.1 percent to 71.73 euros. A gauge of automakers was the second-worst performer on the Stoxx 600 Europe Index.

Infineon, Europe’s second-biggest chipmaker, advanced 2.3 percent to 6.60 euros. Citigroup raised its recommendation on the shares to buy from neutral, citing signs of a broad, consistent improvement in European semiconductor demand.

Rheinmetall AG, the maker of armored military vehicles and artillery systems, added 4.1 percent to 39.85 euros. HSBC Holdings Plc upgraded the stock to overweight, the equivalent of a buy rating, from neutral.

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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