German Stocks Drop for Second Day; Metro, Postbank, Bayer Fall

By Stefanie Haxel

Oct. 16 (Bloomberg) -- German stocks dropped for a second day as concern mounted that bank bailouts in the U.S. and Europe will fail to prevent a recession.

Metro AG lost 4.2 percent, leading declines among companies sensitive to economic growth. Deutsche Postbank AG plunged 6.4 percent on speculation the sale of a stake in the lender to Deutsche Bank AG may collapse. Deutsche Post AG, Europe's biggest postal service, fell to a five-year low after rival TNT NV cut its margin forecast.

The benchmark DAX Index dropped 85.47, or 1.8 percent, to 4,776.16 as of 3:26 p.m. in Frankfurt. DAX Index futures expiring in December slipped 1 percent to 4,813.5. The HDAX Index of the country's 110 biggest companies lost 2 percent to 2,392.38.

The DAX Index has fallen 8.1 percent in the past two days, paring its 14 percent rally at the beginning of the week, when the German government announced a 500 billion-euro ($674 billion) rescue package for banks. The measure is down 41 percent this year as credit losses and asset writedowns at financial firms worldwide topped $640 billion.

``The financial market crisis is followed by the recession crisis,'' Robert Halver, head of research at Baader Bank in Frankfurt, said in a Bloomberg Television interview. ``We have massive concern worldwide that the economy may slump.''

Stocks pared some losses after a reports showed initial jobless claims in the U.S. dropped by 16,000 to 461,000 last week, fewer than forecast, while consumer prices were unchanged in September. Economists had estimated an increase.

Growth Over

The German economy, Europe's largest, may fail to grow next year after the yearlong credit squeeze pushed up lending costs and the global expansion slowed, government adviser Beatrice Weder di Mauro said yesterday. The country's leading economic research institutes estimate expansion of just 0.2 percent in 2009, down from 1.4 percent projected earlier.

Metro, Germany's largest retailer, fell 1.19 euros to 27.46. Beiersdorf AG, maker of Nivea skin creams, slid 54 cents, or 1.4 percent, to 38.15 euros. Arcandor AG, the country's biggest department-store owner, declined 18 cents, or 9.8 percent, to 1.65 euros.

Postbank, Germany's biggest consumer bank by clients, slid 1.45 euros to 21.14, poised to close at a record low.

``There has been rumor in the market that the sale may fail,'' said Stefan de Schutter, a portfolio manager at Alpha Wertpapierhandel in Frankfurt. ``I think that's nonsense, it's more realistic that the deal is being put on hold due to the current market situation.''

Deutsche Bank isn't reconsidering the Postbank investment, a company official said today. Germany's biggest bank last month agreed to buy almost 30 percent of Postbank for 2.79 billion euros and has an option to raise its stake.

Margin Forecast

Deutsche Post, Europe's biggest postal service, lost 1.005 euro, or 8.7 percent, to 10.61, the lowest since May 2003. TNT, the region's second-largest express-delivery company, said margins in international and domestic parcel-delivery operations will come in at a ``solid'' 9 percent for the full year with ``somewhat'' lower sales growth. The Dutch company said in July that earnings before interest and taxes as a proportion of sales would be in the low double-digit percentage range.

Bayer AG dropped 3.28 euros, or 7.8 percent, to 38.60 after Merrill Lynch & Co. lowered its recommendation on shares of Germany's biggest drugmaker to ``neutral'' from ``buy.''

``We are increasingly concerned over the near-term outlook for Material Science and Crop Science due to global recession risk and falling commodity prices,'' analyst Sachin Jain wrote in a research note to clients today.

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

Allianz SE (ALV GY) retreated 3.39 euros, or 4.4 percent, to 74.61 as CA Cheuvreux lowered its share-price estimate for Europe's largest insurer 12 percent to 115 euros.

Dyckerhoff AG (DYK3 GY) fell 1.38 euro, or 3.5 percent, to 38.02 euros. WestLB AG downgraded the cement maker bought by Buzzi Unicem SpA to ``reduce'' from ``add.''

Elmos Semiconductor AG (ELG GY) dropped 14 cents, or 4 percent, to 3.36 euros after WestLB lowered its recommendation for the maker of semiconductors used in cars to ``hold'' from ``buy.''

Praktiker AG (PRA GY) sank 31 cents, or 6 percent, to 4.85 euros. UniCredit Markets & Investment Banking downgraded shares of Germany's second-biggest home-improvement retailer to ``hold'' from ``buy.''

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