Aug. 31 (Bloomberg) -- Germany’s DAX Index, trading at its most expensive level since December 2003, followed Chinese stocks lower as profits at Baoshan Iron & Steel Co. tumbled.

ThyssenKrupp AG and Salzgitter AG, Germany’s biggest steelmakers, both dropped 2.4 percent. Daimler AG, the world’s second-largest maker of luxury cars, fell 1.4 percent. Deutsche Post AG declined for the first time in eight days as Commerzbank AG cut its recommendation for Europe’s biggest mail carrier.

The benchmark DAX fell 52.74, or 1 percent, to 5,464.61. The measure has still gained 2.5 percent this month, extending July’s 11 percent rally. A 49 percent rebound since March 6 has left the gauge valued at about 47 times its companies’ earnings, according to Bloomberg weekly data. The broader HDAX Index decreased 1 percent today.

“The market is taking a breather because of a bit of nervousness about China,” said Matthias Jasper, head of equities at WGZ Bank in Dusseldorf. “The market is a bit tired for the time being and investors are taking gains from the last weeks.”

Chinese stocks plunged today, with the Shanghai Composite Index falling the most since June 2008, on concern a slowdown in lending growth may derail a recovery in the world’s third- largest economy.

ThyssenKrupp declined 2.4 percent to 23.70 euros, while smaller competitor Salzgitter lost 2.4 percent to 66.39 euros. Baoshan Steel, China’s biggest steelmaker, said first-half profit plunged 93 percent to 669 million yuan ($98 million) as the economic slowdown curbed demand from automakers and shipbuilders.

Deutsche Post

Daimler dropped 1.4 percent to 31.53 euros. A measure of automobile-related stocks was the worst performer in the pan- European Dow Jones Stoxx 600 Index, losing 1.4 percent.

Germany’s car industry faces a sales slump of as much as 20 percent next year after the country’s “cash-for-clunkers” stimulus program ends this fall, the Wall Street Journal said, citing a study by management consultants Roland Berger.

Deutsche Post slid 1.8 percent to 12.04 euros, ending the longest winning streak since May. The stock was cut to “hold” from “add” at Commerzbank, which cited “downside risks to longer-term earnings potential in the important mail business.” The brokerage has a price estimate of 12 euros on the stock.

Deutsche Bank AG slipped 2.2 percent to 47.35 euros. Germany’s biggest bank lost a court ruling declaring decisions by the lender’s 2008 shareholder meeting void, including the election of Clemens Boersig to its supervisory board. Commerzbank, the country’s second-largest bank, dropped 1.3 percent to 6.44 euros.

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

Air Berlin Plc (AB1 GY) declined 1.6 percent to 3.81 euros. Vereinigung Cockpit e.V., the German labor union representing pilots, called on pilots employed by Europe’s third largest discount carrier’s LTU unit to strike today after wage talks faltered. The strike action will take place from 5:30 a.m. to 9:30 p.m., the union said.

Aixtron AG (AIXA GY) sank 5.2 percent to 13.69 euros, a third straight decline. The maker of specialized equipment used to produce LED screens was cut to “hold” from “add” at Commerzbank after the stock reached the brokerage’s share-price estimate of 14.50 euros.

Arcandor AG (ARO GY) jumped 22 percent to 26 cents. Employees at the insolvent retailer’s Karstadt department stores will forfeit as much as 12 percent of their pay in a cost- cutting measure, Bild am Sonntag reported, citing Hellmut Patzelt, deputy chairman of Arcandor’s supervisory board.

Bilfinger Berger AG (GBF GY) retreated 5.1 percent to 43.08 euros. Germany’s second-largest construction company was cut to “hold” from “buy” at UniCredit Markets & Investment Banking. The brokerage cited “the strong share price performance since mid-July” and said “positive signs are not yet materializing.”

KTG Agrar AG (7KT GY) increased 1.9 percent to 14.01 euros, the first gain in five days. Germany’s largest publicly traded farming company said first-half net income rose 72 percent to 1.8 million euros ($2.6 million).

Porsche SE (PAH3 GY) decreased 3.2 percent to 51.40 euros, erasing a 1.6 percent rise on Aug. 28. The sports-car maker is facing a separate probe by Frankfurt prosecutors as an investigation into possible violations regarding the trading of Volkswagen AG shares spreads outside Porsche’s home state.

Preferred shares of Volkswagen (VOW3 GY) added 1.4 percent to 65.47 euros. Citigroup Inc. raised its price estimate for VW’s preferred shares to 80 euros from 45 euros, saying they “are effectively the only practical investment route into the European, and possibly global car leader, with index inclusion inevitable we believe, though not before December unless Qatar exercises early.”

ZhongDe Waste Technology AG (ZEF GY) sank 5.9 percent to 12.07 euros, the lowest closing price since April. The builder of waste incinerators in China said second-quarter net profit slumped to 34,000 euros from 5.2 million euros, as revenue fell.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

Last Updated: August 31, 2009 11:57 EDT