German shares lower midday as Fed rate decision continues to weigh

German shares lower midday as Fed rate decision continues to weigh

	Published : Wed, 12 Dec 2007 12:54 By : Agencies Print this Story

FRANKFURT (Thomson Financial) - Shares were lower in midday trade as the US Federal Reserve quarter-point interest rate cut continued to disappoint investors, while minimal newsflow did little to bolster their sentiment.

Traders said the local market, however, was slowly warming to an anticipated higher opening on Wall Street this afternoon.

At 12.46 pm, the DAX was down 30.77 points or 0.38 pct to 7,978.65, after trading between 7,928.12 and 7.983.83 so far today.

The MDAX eased 68.95 points or 0.69 pct to 9,969.59, while the TecDAX was 8.53 points or 0.86 pct lower at 987.33.

DAX futures added 88.50 points or 1.12 pct at 7,993.50.

The euro was trading at 1.4684 usd, against 1.4682 usd in London morning trade.

Market analyst Robert Halver at Vontobel pointed to moderate disappointment among investors with the US Fed's decision yesterday to drop interests rates by 25 basis points as the major factor pressuring the market. Some market watchers had speculated about whether the Fed would cut the benchmark rate by 50 basis points to 4.00 pct, Halver said.

'When this drop didn't materialize, investors turned to consolidating profits,' Halver said.

Other traders said some investors interpreted comments by the Fed as signalling its third base rate cut since August might be enough to cope with the current credit and economic crisis.

Leading blue chips lower, Fresenius Medical Care, dropped 0.95 eur or 2.51 pct at 36.86 as the worst performer.

Shares in Daimler were down 0.75 eur or 2.50 pct at 68.13 as traders pointed to technical trading weaknesses after the stock was unable to push past the 70 eur mark recently.

BMW eased 0.94 eur or 2.24 pct at 41.10 as traders said the recent weakness in the US dollar could signal a weak 2008 outlook for the automaker.

Infineon dipped 0.17 eur or 1.92 pct at 8.70, traders pointing to investors shifting their portfolios and the stock's general sensitivity to market weaknesses, rather than sales numbers released by the chipmaker.

Commerzbank retreated 0.39 eur or 1.41 pct to 27.28 as the worst performer among banking stocks, after the sector came under pressure following the Fed's rate decision and as media reports said German financial institutions might face additional write-offs due to the fallout from the sub-prime crisis.

Handelsblatt newspaper said German banks might face further write-offs valued at billions of euro from sub-prime-related assets.

Peer Deutsche Bank was 1.23 eur or 1.36 pct lower at 89.44, and Deutsche Postbank was down 0.29 eur or 0.49 pct at 58.65.

Hypo Real Estate shares bucked the sector trend, gaining 0.12 eur or 0.32 pct at 38.12.

SAP eased 0.42 eur or 1.18 pct to 36.03 after Credit Suisse cut its rating to 'underperform' from 'outperform' and took the German business software maker off its Focus List, predicting margin pressure and a low likelihood of consensus-beating future earnings.

At the other end of the DAX, Bayer added 0.98 eur or 1.67 pct at 59.83, after JP Morgan raised its target price on the pharma giant to 75 eur from 74, while maintaining its 'overweight' rating.

Traders also pointed to renewed rumours that Swiss-based Novartis might be mulling over a bid for Bayer.

TUI shares gained 0.20 eur or 1.02 pct at 19.85.

Utilities were in demand as RWE added 0.42 eur or 0.44 pct at 94.94, and E.ON gained 0.87 eur or 0.61 pct at 143.00.

ProSieben lost 0.55 eur or 3.07 pct at 17.37 as the worst performer on the MDAX.

Bucking the negative trend, Norddeutsche Affinerie added 0.99 eur or 3.81 pct at 26.99, after a media report said A-Tec Industries chief executive Officer Mirko Kovats is seeking to increase his company's stake in the German copper specialist to about 20 pct from 14 pct.

TecDAX-listed Conergy dropped 2.38 eur or 9.17 pct to 23.57 after the alternative power specialist said it expects to make a full-year EBIT loss of 150-200 mln eur, compared with a previous forecast of a 40 mln eur profit, and that it does not expect to achieve its 1 bln eur sales target.

Versatel added 0.57 eur or 2.63 pct at 22.22 as the top performer on the index.

Tyler.Sitte@thomson.com

ts/am

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