Mooted company car tax takes toll on auto stocks

Eurostoxx 50:3,000.39 (-8.50) Frankfurt Dax:7,500.70 (-26.94) Paris CAC:4,096.84 (-11.93)

EUROPEAN STOCKS declined, snapping the Stoxx Europe 600 Index’s longest winning streak in 10 months, as energy companies and car makers slid after a report stoked speculation Germany may raise company car taxes.

The Stoxx 600 fell 0.5 per cent to 282.43 after eight days of gains pushed the measure to a two-month high. The gauge in April had the biggest monthly increase so far this year as companies reported earnings that topped analyst estimates and the US Federal Reserve maintained its pledge to keep interest rates low.

National benchmark indices fell in 15 of the 18 western European markets. Germany’s Dax dropped 0.4 per cent and France’s CAC 40 lost 0.3 per cent.

An index of oil and gas companies in the Stoxx 600 fell the most in three weeks as crude slid for a second day in New York.

A gauge of auto-industry shares dropped for the first time in nine days after a report commissioned by the German environment ministry said the government should change the way it taxes company cars. The current system that taxes the private use of company cars based on their list price should be replaced with a system based on the purchase price and kilometres travelled, according to the study. The revised rules should discourage firms from buying cars that use a lot of fuel, it said.

Volkswagen, Europe’s biggest car maker, slid 1.7 per cent. BMW declined 1.7 per cent and Daimler slid 1.6 per cent. Fiat retreated 2.1 per cent as Italian car sales fell 2.2 per cent last month.

Hannover Re lost 1 per cent in Frankfurt after the reinsurer cut its full-year profit forecast to about €500 million from €650 million.

Metro retreated 2.2 per cent even after Germany’s largest retailer said its first-quarter net loss narrowed to €3 million from €16 million in the year.

Deutsche Bank declined 2.1 per cent. Germany’s biggest bank was sued by the US government for misrepresentations in joining a federal loan programme and “years of reckless lending practices”, according to court filings.

Infineon Technologies gained 2.3 per cent after Europes second-largest chipmaker increased its full-year forecast for the fifth time since the beginning of 2010 as second-quarter revenue and profit surged on higher demand. – (Bloomberg)