By Alexis Xydias
Jan. 19 (Bloomberg) -- German stocks fell, erasing earlier gains, as concern deepened that the global recession will result in deteriorating earnings.
BASF AG, the world’s largest chemicals marker, dropped 4.7 percent after saying demand has continued to decline. Deutsche Bank AG and Commerzbank AG followed banks across Europe lower after Royal Bank of Scotland Group Plc said it may post a record loss and the U.K. government may increase its stake to as much as 70 percent.
The benchmark DAX Index lost 0.5 percent to 4,343.9 as of 2:53 p.m. in Frankfurt, after earlier rising as much as 2 percent. The broader HDAX declined 0.6 percent.
The DAX has tumbled 46 percent since the beginning of last year as bank’s credit losses and writedowns topped $1 trillion in the worst financial crisis since the Great Depression and the U.S., Japan and Europe fell into simultaneous recessions.
Deutsche Bank slipped 11 percent to 17.73 euros, the lowest since at least 1992 and taking its loss in 2009 to 36 percent. Commerzbank fell 3.2 percent to 3.07 euros, an eleventh straight day of declines. Banks plummeted in the U.K. today as concern grew that the latest government attempt to shore up the industry may result in nationalization, according to analysts including Keith Bowman at Hargreaves Lansdown Stockbrokers in London.
The U.K. today announced an extension to guarantees on banks’ troubled assets to help clear clogged balance sheets. Denmark will offer loans to banks and mortgage lenders worth 100 billion kroner ($17.8 billion) in the country’s biggest ever bailout. Germany’s 20 biggest banks have accumulated about 300 billion euros ($398 billion) of toxic assets, Spiegel magazine reported on Jan. 17.
BASF fell 4.7 percent to 22.70 euros. The company said its business declined “significantly” in December and that it sees no signs of an improvement as the economy worsens.
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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