June 24 (Bloomberg) -- Deutsche Post AG, Europe's biggest postal service, fell to a 3 1/2-year low in German trading after U.S. partner United Parcel Service Inc. cut an earnings outlook because of rising fuel costs and a slowing U.S. economy.

Deutsche Post dropped as much as 73 cents, or 4.1 percent, to 16.92 euros, the lowest price since Jan. 18, 2005, and was down 3.7 percent at 10:27 a.m. in Frankfurt. The shares have declined 28 percent this year, valuing the Bonn-based mail carrier at about 20.5 billion euros ($32 billion).

Atlanta-based UPS, the world's largest package-delivery company, forecast yesterday that second-quarter earnings will total 83 cents to 88 cents a share, down from a range of 97 cents to $1.04 projected on April 23. Deutsche Post said in May that it intends to shift U.S. air shipments to UPS as part of a strategy to curb losses at its DHL Express unit.

To contact the reporter on this story: Jann Bettinga in Frankfurt at jbettinga@bloomberg.net.

Last Updated: June 24, 2008 04:29 EDT