Monday, July 6, 2009

DAX Index Declines for Third Day

. Monday, July 6, 2009

By stockOzone team

German stocks fell for a third day, with the benchmark DAX index extending its decline from this year’s high to almost 10 percent, the common definition of a “correction,” on concern the economic recovery will falter.

Volkswagen AG and Porsche SE both sank more than 2.5 percent after UBS AG recommended selling Porsche shares. ThyssenKrupp AG fell 2.9 percent after people familiar with the situation said Germany’s largest steelmaker has scrapped the sale of an industrial services unit.

The DAX Index declined 1.7 percent to 4,629.57 at 12:24 p.m. in Frankfurt. The gauge has lost 10 percent since June 2 on speculation share prices have outpaced the outlook for economic growth following a three-month rally. The broader HDAX Index decreased 1.6 percent to 2,322.3 today.

“It’s a consolidation but the consolidation has the possibility to be a lot harsher than people expect,” said Ulf Moritzen, who helps manage about $1.1 billion at Aramea Asset Management in Hamburg. “Investors are questioning the strength of the economy just as we are going into the summer, and it will be quiet. Automakers are at risk of going lower and dragging the index more than the rest of Europe and more than the U.S.”

U.S. Vice President Joe Biden told ABC News yesterday that the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus plan. The Institute of Supply Management’s index today may show U.S. service industries contracted for a ninth straight month in June.

Volkswagen retreated 3.5 percent to 225.47 euros. Porsche dropped 2.8 percent to 44 euros. The carmaker was cut to “sell’ from “neutral” at UBS, which cited growing debt and a greater likelihood that the company will be forced to sell its Volkswagen stake.

Separately, Porsche and its stock options in Volkswagen have attracted interest from three potential investors beside the Qatar Investment Authority, Focus reported, without saying where it got the information.

Porsche today denied a Handelsblatt report that it received confirmed interest from five potential buyers for options its holds on VW shares aside from Qatar.

Porsche spokesman Albrecht Bamler said in a telephone interview that the company didn’t make such a statement to Handelsblatt.

ThyssenKrupp fell 2.9 percent to 16.49 euros. The steelmaker scrapped the sale of an industrial services unit as part of a 1 billion-euro ($1.4 billion) disposal of assets after buyers pulled out, people familiar with the situation said.

Salzgitter AG, the second-largest German steelmaker, slid 3.3 percent to 58.16 euros.

The following stocks also rose or fell in German markets. Symbols are in parentheses after company names.

BASF SE (BAS GY) gained 33 cents, or 1.2 percent, to 27.99 euros. The world’s largest chemical company was raised to “buy” from “neutral” at Bank of America Corp.

Deutsche Lufthansa AG (LHA GY) advanced 12 cents, or 1.4 percent, to 8.845 euros. The German carrier was raised to “buy” from “underperform” at Bank of America, which said “we expect the revenue backdrop to stabilize.”

MAN SE (MAN GY) dropped 71 cents, or 1.7 percent, to 41.50 euros. Assembly lines at Europe’s third-largest truck maker are operating at 40 percent capacity, according to a report in the magazine WirtschaftsWoche, citing an unidentified MAN manager. A supervisory board meeting on July 8 will discuss whether to curtail bus sales to countries known for corruption after prosecutors accused the company of paying bribes to win contracts, the magazine said.

Disclosure: Author does not own any of the stocks discussed here.

Bookmark and Share


Post a Comment

Visit to discover Indian blogs