German Stocks Fall on Crude Oil, Bank Concerns; Lufthansa Drops

By Stefanie Haxel

Aug. 21 (Bloomberg) -- German stocks fell to a five-week low as higher oil prices damped the earnings outlook for airlines and carmakers and concern mounted that financial firms may post more credit-related losses.

Deutsche Lufthansa AG, Europe's second-largest airline, and Bayerische Motoren Werke AG led a retreat among companies sensitive to fuel costs as crude traded above $118 a barrel. Deutsche Bank AG, Germany's biggest, and Hypo Real Estate Holding AG dropped for a fourth day as Babcock & Brown Ltd. of Australia posted its first-ever profit decline and Citigroup Inc predicted three U.S. banks will write down a combined $6.4 this quarter.

The benchmark DAX Index lost 72.66, or 1.2 percent, to 6,254.14 as of 2:46 p.m. in Frankfurt, the lowest since July 16. DAX futures expiring in September sank 1.2 percent. The HDAX Index of the country's 110 biggest companies fell 1 percent.

``It looks as if the bear-market rally has been shelved,'' Richard Zellmann, director of sales and research at First Private Investment in Frankfurt, said in a Bloomberg Television interview. ``News are still downright negative and the trend is clearly bearish.''

Crude oil for October delivery rallied as much as 3.1 percent to $118.49 a barrel in New York on concern that Russian crude may be disrupted after the U.S. agreed to build a missile- defense system in Poland and the conflict in Georgia has halted supplies from the Caspian Sea.

Lufthansa sank 21 cents, or 1.5 percent, to 14.175 euros. Jet-fuel prices in northwest Europe have risen 29 percent so far this year, Bloomberg data show.

BMW, the world's biggest luxury carmaker, lost 69 cents, or 2.4 percent, to 28.01 euros.

Consumer Shares

Henkel AG & Co. KGaA dropped 78 cents, or 2.9 percent, to 26.18 euros, the lowest in two weeks. The maker of Loctite glue and Persil detergent on Aug. 6 cut its earnings forecast because of surging costs for oil-based chemicals.

Praktiker AG, Germany's second-biggest home-improvement retailer, sank 39 cents, or 4 percent, to 9.34 euros, the lowest since selling shares in 2005. Arcandor AG, the country's largest department-store operator, slumped 43 cents, or 7.2 percent, to 5.56 euros, the lowest since 1992.

Deutsche Bank declined 83 cents, or 1.5 percent, to 56.22 euros. Commerzbank AG, the nation's second-biggest bank, lost 43 cents, or 2.1 percent, to 19.72 euros. Hypo Real Estate, the country's second-largest commercial-property lender, retreated 27 cents, or 1.7 percent, to 16.13 euros.

Record Low

Babcock & Brown, Australia's second-biggest manager of listed funds, plunged to a record low in Sydney trading. First- half net income dropped 24 percent as its listed funds slumped amid the global financial crisis.

Citigroup analyst Prashant Bhatia lowered his third-quarter earnings estimates for Lehman Brothers Holdings Inc, Goldman Sachs Group Inc. and Morgan Stanley, estimating the three banks will write down a combined $6.4 billion for the period.

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

Arques Industries AG (AQU GY) tumbled 84 cents, or 10 percent, to 7.35 euros, the steepest decline since April. The investment company reported a second-quarter loss and said ``difficult'' market conditions prompted it to lower its profit forecast for 2008.

IKB Deutsche Industriebank AG (IKB GY) rallied 23 cents, or 8.6 percent, to 2.91 euros, the highest in six weeks. Lone Star Funds, the Dallas-based private equity firm, agreed to buy Germany's first casualty of the subprime mortgage crisis.

Kloeckner & Co. SE (KCO GY) retreated for the fourth time in five days, losing 98 cents, or 3.5 percent, to 27.12. HSBC Holdings Plc downgraded the steel trader to ``neutral'' from ``overweight.''

Merck KGaA (MRK GY) gained for a fourth day, adding 1.79 euros, or 2.4 percent, to 76.71. UBS AG rated the maker of the Erbitux cancer drug ``buy'' in new coverage.

To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.