Aug. 4 (Bloomberg) -- German stocks dropped for a second day on increased concern about the growth prospects for European banks.

Deutsche Bank AG led a decline in German banking shares after HSBC Holdings Plc, Europe's biggest bank, said it set aside more money for bad loans in the U.S. Bayerische Motoren Werke AG fell for a sixth day as Societe Generale cut its recommendation to ``hold'' and other brokerages including Deutsche Bank lowered their share-price estimates. Deutsche Lufthansa AG slipped as Europe's second-biggest airline may face new strikes.

The DAX Index lost 46.65, or 0.7 percent, to 6,349.81. DAX futures expiring in September slipped 19, or 0.3 percent, to 6,408.50 as of 6:31 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies decreased 0.8 percent.

``What weighs on the market today are basically three topics, namely banks, which suffer after HSBC, then there's oil, that keeps the market busy and investors also still digesting last week's earnings from companies including BMW,'' said Thomas Tilse, head of portfolio strategy for private clients at Cominvest in Frankfurt, which has the equivalent of $101 billion under management.

HSBC said first-half profit declined 29 percent as it set aside more money for bad loans in the U.S. and said emerging markets may grow more slowly this year.

Markdowns

Fortis, the Belgian financial-services company that ousted its chief executive officer last month, said second-quarter profit fell 49 percent on credit-related writedowns and that the difficult economic environment ``will remain.''

Deutsche Bank dropped 93 cents, or 1.6 percent, to 57.83 euros. Merrill Lynch & Co. cut its 2008 adjusted earnings per share estimate for Germany's largest bank by 50 percent and said it now assumes a 2008 dividend of 3.5 euros, down from 4.5 euros.

``Having initially weathered the credit turmoil very well, Deutsche is finding the going tougher in 2008,'' Merrill analysts wrote in a research note today. ``We forecast a further 1.5 billion euros of markdowns for the second half on monolines and leveraged buyouts.''

Hypo Real Estate Holding AG, the country's second-biggest commercial-property lender, retreated 25 cents, or 1.4 percent, to 18.02 euros. Deutsche Postbank AG, Germany's biggest consumer bank by clients, dropped 1.05 euros, or 2.4 percent, to 43.30.

BNP Paribas SA helped trigger the global credit seizure a year ago this week after France's largest bank by market value halted withdrawals from three funds invested in subprime debt.

BMW Cut

BMW, the world's biggest luxury carmaker, fell 73 cents, or 2.7 percent, to 26.63 euros. Societe Generale reduced its recommendation on the shares to ``hold'' from ``buy.'' The carmaker abandoned its profit forecast Aug. 1 because of falling U.S. sales, the dollar's decline and rising costs for plastics, steel and oil.

Deutsche Bank lowered its share-price estimate for the carmaker to 25 euros from 31 euros.

Deutsche Lufthansa sank 17 cents, or 1.2 percent, to 14.54 euros. Europe's second-biggest airline may face strikes by as many as 5,000 pilots, Handelsblatt reported, citing a spokesman for the Vereinigung Cockpit union. Negotiations on a new work contract are currently in deadlock and a decision on whether to strike will be made in the next few days unless there's a breakthrough, the newspaper said.

Crude oil fell as much as 4.5 percent to $119.50 amid speculation that Tropical Storm Edouard won't cause disruption to most offshore oil facilities as it approaches the coast of Texas.

Deutsche Boerse AG, operator of the Frankfurt Exchange, lost 3.54 euros, or 5 percent, to 66.74 euros. Volume on the company's Xetra trading system dropped 13 percent last month. Deutsche Bank and HSBC analysts lowered their price estimates on the stock.

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

Aixtron AG (AIX GY) climbed 49 cents, or 8.6 percent, to 6.21 euros, the steepest rise in more than two weeks. Credit Suisse Group AG raised its recommendation on the equipment maker for the semiconductor industry to ``neutral'' from ``underperform.''

A.S. Creation (ACW GY) slipped 1.21 euro, or 3.6 percent, to 32.49, the first decline in three days. Germany's biggest wallpaper maker said achieving its 2008 goals has become more challenging amid rising costs for raw materials and energy.

Infineon Technologies AG (IFX GY), Europe's second-largest maker of semiconductors, increased 22.5 cents, or 4.7 percent, to 5.02 euros. Nanya Technology Corp., Taiwan's second-biggest memory-chip maker, rallied in Taipei trading today after an analyst said Micron Technology Inc. may buy a stake in its venture Inotera Memories Inc.

Pfleiderer AG (PFD4 GY) gained for a third day, adding 23 cents, or 2.9 percent, to 8.04 euros. The flooring maker with 22 factories on two continents plans to close an unprofitable site in La Baie, Canada, and shift production to North Carolina, where it will invest 80 million euros to become ``cost leader also in the production of laminate flooring.''

ProSiebenSat.1 Media AG (PSM GY) climbed 11 cents, or 2 percent, to 5.53 euros. Telegraaf Media Groep NV, the owner of the biggest Dutch newspaper, said Aug. 1 after the market's official close it will buy a 12 percent stake in Germany's biggest private broadcaster.

Stada Arzneimittel AG (SAZ GY) climbed 78 cents, or 2.5 percent, to 31.86, the largest rise in more than two weeks. Germany's third-largest generic-drug maker was raised to ``hold'' from ``add'' by WestLB analysts.

To contact the reporters on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net; Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.

Last Updated: August 4, 2008 12:41 EDT