German Stocks Decline, Led by Volkswagen, Deutsche Bank, BASF

By Daniela Silberstein

Dec. 22 (Bloomberg) -- German stocks fell for a second day, led by automakers and financial companies on concern the deepening global recession will curb corporate earnings.

Volkswagen AG retreated 8.7 percent as Japan’s Toyota Motor Corp. forecast its first operating loss in 71 years on plunging North American and European car sales and a surging yen. Deutsche Bank AG led financial shares lower, falling 3.5 percent. BASF SE slipped 2.1 percent after Frankfurter Allgemeine Zeitung reported the chemical maker faces costs of 100 million euros ($138.8 million) in connection with the European Union’s climate protection plan.

The benchmark DAX Index fell 107.16, or 2.2 percent, to 4,589.54 as of 10:05 a.m. in Frankfurt. DAX futures expiring in March lost 1.8 percent. The broader HDAX Index sank 2.1 percent.

Germany’s DAX is headed for a 44 percent decline this year, the steepest annual drop since 2002, as more than $1 trillion in credit-related losses and writedowns at finance firms worldwide push the economy toward a recession.

German consumer confidence for January was unchanged as a deterioration in the economic outlook was offset by a stronger willingness to buy, according to a survey by Nuremberg-based market-research company GfK AG.

Volkswagen, Europe’s biggest automaker, dropped 24.93 euros, or 8.7 percent, to 261 euros. Toyota, the world’s second-largest carmaker, said its loss in the year ending March will likely total 150 billion yen ($1.7 billion), compared with a previous forecast for a 600 billion yen operating profit. Toyota cut its net income forecast 91 percent to 50 billion yen.

Sales Slide

BMW AG fell 66 cents, or 3 percent, to 21.26 euros. The world’s largest maker of luxury cars doesn’t rule out production and cost cuts next year as sales in the company’s main markets slide, Auto Motor und Sport reported, citing management board member Ian Robertson.

Daimler AG, the world’s largest truckmaker, declined 1.12 euros, or 4.3 percent, to 24.94 euros. MAN AG, Europe’s third- biggest truckmaker, slipped 1.6 euros, or 4.5 percent, to 34.15.

Deutsche Bank, Germany’s largest bank, retreated 94 cents, or 3.5 percent, to 25.76 euros. Commerzbank AG lost 19 cents, or 3.1 percent, to 6.04 euros. The second-biggest German bank agreed to lend 2.5 billion euros more to small- and medium-sized firm in exchange for government aid.

BASF slumped 55 cents, or 2.1 percent, to 25.88 euros. The world’s biggest chemical producer faces a cost of 100 million euros in connection with the European Union’s plan to cut emissions of greenhouse gases, Frankfurter Allgemeine Zeitung said, citing an interview with Chief Executive Officer Juergen Hambrecht.

The extra costs associated with complying with the EU rules are the “last thing that we need in these economically extremely hard times,” the newspaper quoted Hambrecht as saying.

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

Infineon Technologies AG (IFX GY) rallied 7.5 cents, or 11 percent, to 73.5 cents. Deutsche Bank AG upgraded shares of Europe’s second-largest maker of semiconductors to “hold” from “sell.”

Separately, Qimonda AG, majority-owned by Infineon, will get a loan of 325 million euros from the German state of Saxony, Infineon and an unidentified Portuguese bank as part of a rescue package.

RWE AG (RWE GY) advanced 34 cents, or 0.6 percent, to 61.13 euros. The oil and gas exploration and production business of Germany’s second-largest utility probably increased sales and profit in 2008, though earnings next year may be hurt by the recent decline in oil prices, Handelsblatt reported, citing the division’s chief.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.