German stocks declined, after the benchmark DAX (DAX) Index fell last week, as U.S. House Speaker John Boehner ruled out raising the federal government’s debt limit without setting preconditions.
Norma Group SE dropped 3.4 percent after HSBC Holdings Plc downgraded the shares. Deutsche Bank AG (DBK) slid 1.4 percent after Canaccord Genuity Corp. cut its rating on Germany’s largest lender. TAG Immobilien AG tumbled 7.7 percent. EON SE and RWE AG (RWE) climbed 1.3 percent and 1.4 percent, respectively, after Exane BNP Paribas upgraded the utilities.
The DAX retreated 1.2 percent to 8,523 at 9:53 a.m. in Frankfurt. The equity benchmark slipped 0.4 percent last week as a standoff between U.S. lawmakers led to the first government shutdown in 17 years. The HDAX Index lost 1.1 percent today.
“The weekend passed and a compromise has not been found yet,” Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in an e-mail. “Consequently, investors are again more nervous this morning.”
In the U.S., Democrat and Republican lawmakers continued to clash over a spending measure to end the shutdown, a deadlock that investors speculate will seep into talks to raise the country’s $16.7 trillion debt ceiling.
Boehner has ruled out passing a bill to increase the borrowing limit without attaching other conditions. His party is calling for changes to President Barack Obama’s health-care act before agreeing to a new budget.
“We are not going to pass a clean debt limit,” Boehner said in an interview on ABC yesterday. “The votes are not in the House to pass a clean debt limit.”
The Obama administration has said it won’t negotiate with Republicans over funding the government or raising the debt ceiling, arguing that it is part of the basic function of Congress and shouldn’t be used as leverage.
The Treasury has said it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the U.S. will run out of money to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
U.S. earnings season starts tomorrow with Alcoa Inc. scheduled to release third-quarter results after the market closes.
The VStoxx Index, which gauges the cost of protecting against losses on the Euro Stoxx 50 Index, surged 8.9 percent to 21.22 today.
The volume of shares changing hands in DAX-listed companies was 11 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
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