German Stocks Drop for Second Day, Led by Financial Companies

By Mike Gavin

March 2 (Bloomberg) -- German stocks declined for a second day on concern financial companies may need to raise more capital after credit-related losses and writedowns eroded earnings.

Commerzbank AG, Deutsche Bank AG, Deutsche Postbank AG and Allianz SE all slumped more than 5 percent after HSBC Holdings Plc, Europe’s largest bank by market value, said it plans to raise 12.5 billion pounds ($17.7 billion) in a rights offer.

The benchmark DAX Index percent dropped 3.2 percent to 3,722.74 as of 12:24 p.m. in Frankfurt. The measure has tumbled 23 percent this year on concern government measures won’t be enough to revive the global economy. DAX futures expiring in March percent sank 3.1 percent, while the broader HDAX Index decreased 3.1 percent.

Commerzbank slid 7 percent to 2.60 euros. Chief Executive Officer Martin Blessing said the bank may need more cash from the government, though it’s fine for now, Frankfurter Allgemeine Sonntagszeitung reported.

The lender first tapped Germany’s Soffin bank-rescue fund for 8.2 billion euros ($10.4 billion) in November. In January, Commerzbank said it would get another 10 billion euros of aid and that the government would take a stake of 25 percent plus one share. The bank has also been granted 15 billion euros of debt guarantees by the government.

Deutsche Bank, Germany’s biggest bank, sank 5.9 percent to 19.55 euros. Allianz, the country’s largest insurer, slumped 5.7 percent to 50.60 euros. Postbank lost 5.5 percent to 8.31 euros.

HSBC posted full-year net income today that missed analysts’ estimates and cut its dividend.

Credit Losses

Financial firms around the globe have racked up more than $1.1 trillion in credit losses and writedowns, pushing the U.S., Europe and Japan into the first simultaneous recessions since World War II.

Billionaire Warren Buffett said the economy will be “in shambles” this year, and perhaps longer, before recovering from the reckless lending that caused the worst “freefall” he ever saw in the financial system.

Munich Re, the world’s biggest reinsurer, tumbled 5.1 percent to 92.02 euros. Deutsche Boerse AG, Europe’s largest exchange by market value, sank 5.8 percent to 34.26 euros.

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

GFT Technologies AG (GFT GY) surged 16 percent to 1.46 euros. The banking software company predicted 2009 revenue at the same level as last year and proposed paying a dividend of 10 cents a share.

Linde AG (LIN GY) declined 2.2 percent to 49.86 euros. HSBC Holdings Plc lowered its share-price estimate for the world’s second-biggest maker of industrial gases 11 percent to 75 euros.

Praktiker AG (PRA GY) tumbled 5.6 percent to 4.03 euros. Deutsche Bank cut its share-price estimate for Germany’s second- biggest home-improvement retailer to 6.50 euros from 8 euros.

Tognum AG (TGM GY) slid 4.5 percent to 7.65 euros as HSBC reduced its share-price projection for the diesel-engine maker to 28 percent to 13 euros.

To contact the reporter on this story: Mike Gavin in Frankfurt at mgavin2@bloomberg.net.