Bloomberg News

German Stocks Decline Before U.S. Fed Announcement (Correct)

June 20, 2013

(Corrects direction of DAX Index (DAX) in third paragraph.)

German stocks declined, snapping a three-day streak of gains, as investors awaited the outcome of a Federal Reserve meeting for signs of the central bank’s plan for stimulus.

Lanxess AG slid 3.5 percent after Warburg Research cut its recommendation on the chemical manufacturer. EON SE and RWE AG, Germany’s biggest utility companies, followed their European peers lower. Celesio AG jumped the most since at least 1996 after Manager Magazin reported that CVS Caremark Corp. may buy Franz Haniel & Cie GmbH’s stake in the drug wholesaler.

The DAX Index fell 0.4 percent to 8,197.08 at the close of trading in Frankfurt, after earlier rising as much as 0.7 percent and falling 0.8 percent. The equity benchmark lost 1.5 percent last week on concern that the Fed will start to taper its bond-purchase program in September. The broader HDAX Index also fell 0.4 percent today.

“Investors want to hear some reassuring news and if they don’t the markets could be volatile because they want to hear that quantitative easing is not going to be withdrawn any time soon, and that there is support for the economy,” said Justin Urquhart Stewart, who helps oversee about $6.8 billion at Seven Investment Management in London.

The Federal Open Market Committee ends its two-day meeting today. Chairman Ben S. Bernanke holds a press conference after the Fed announces its policy decision.

Lanxess, the chemical manufacturer that joined the DAX in September, slid 3.5 percent to 52.07 euros. Warburg cut its recommendation on the shares to sell from hold, saying it sees no major improvement in underlying demand and pricing in the second half of the year.

Utilities Fall

EON lost 1.2 percent to 13.06 euros, while RWE declined 1.7 percent to 25.91 euros. A gauge of utility stocks was among the worst performers of the 19 industry groups on the Stoxx Europe 600 Index.

Celesio jumped 11 percent to 17.89 euros. Manager Magazin reported that CVS may buy Haniel’s 50.1 percent stake in the drug wholesaler for as much as 2 billion euros. Celesio Chief Executive Office Markus Pinger has been in talks with CVS for some time, according to the report, which cited people familiar with the negotiations. A spokesman for Haniel said in a telephone interview that the company had not held talks with CVS.

Heidelberger Druckmaschinen AG rose 1 percent to 2.16 euros. Warburg Research upgraded the maker of printing equipment, saying cost cuts will improve earnings.

The volume of shares changing hands in companies listed on the DAX was 20 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.

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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