StockBeat: Markets Fall on German Orders; Unicredit Eyes Commerzbank — Europe’s stock markets were lower after early trade on Thursday, weighed down by fresh signs of weakness from the region’s largest economy and unimpressed by seemingly positive news both on Brexit and the U.S.-China trade war.

The benchmark Euro Stoxx 600 was down 1.14 points, or 0.3% at 387.42, while Germany’s Dax was down 0.3% and the FTSE 100 down 0.6% as the pound pushed higher after parliament again voted against a ‘no-deal’ Brexit.

The sharpest drop in German factory orders in two years in February – including a 6% drop in export orders – has underlined again how much the euro zone has to lose both by a hard Brexit and by a continued trade war between the U.S. and China. The figures are consistent with a further drop in manufacturing activity in Germany in March.

However, the most interesting story out there this morning doesn’t concern trade. The Financial Times has reported that Unicredit (MI:CRDI), Italy’s second-biggest bank, is preparing a bid for Commerzbank (DE:CBKG) as an alternative to the all-German union of Commerzbank and Deutsche Bank (DE:DBKGn).

Commerzbank’s shares are up 2.7%, while Unicredit’s and Deutsche’s were both down 2.1%.

The Deutsche-Commerzbank plan, pushed mostly by the government in Berlin that wants to create a national champion, has quickly run into huge opposition from regulators, shareholders and labor unions. Neither bank’s management has appeared especially keen, either.

By contrast, a foreign buyer for Commerzbank would have the advantage of not creating a bank so large that it captured the country’s regulators. The trouble is that that leaves Deutsche Bank, a bank that is already on global regulators’ radar screens, unable to earn its way in the world and big enough to cause severe problems with the financial system if it ever gets into trouble.

“Nobody wants to merge with that bank because you don’t know what you buy,” Stefan Mueller, CEO of the German shareholder advisory body DGWA, told Bloomberg earlier Thursday, pointing to unresolved issues regarding its connections to money-laundering by Scandinavian banks, and to its close and controversial relationship with Donald Trump before he became President.