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German Stocks Retreat as U.S. Confidence Drops; E.ON, Rational Shares Fall

German stocks retreated, erasing the weekly advance in the DAX Index, as a report showed U.S. consumer confidence unexpectedly dropped in September to a one- year low.

Utility shares led declines, falling more than 2 percent. Rational AG dropped as HSBC Holdings Plc downgraded the shares. SAP AG, the world’s biggest maker of business-management software, and Infineon Technologies AG rose after Research In Motion Ltd. and Oracle Corp. reported profits that topped analysts’ estimates.

The DAX lost 0.6 percent to 6,209.76 in Frankfurt, posting its first weekly decline this month. The gauge has retreated 2.2 percent from its 2010 high on Aug. 9 after the Federal Reserve said the pace of recovery in the U.S. economy will probably be “more modest” than forecast. The broader HDAX Index fell 0.5 percent today.

“Consumer sentiment is still very weak and the market sentiment overall is very negative,” said Stefan Risse, a strategist at CMC Markets in Hamburg. “The DAX was also massively influenced by the triple witching today.”

Triple witching refers to the final hour of trading before equity, index options, and index futures expire. This occurs on the third Friday of the last month of each quarter.

The Thomson Reuters/University of Michigan preliminary September index of consumer sentiment fell to 66.6 from 68.9 a month earlier. The gauge was projected to rise to 70, according to the median estimate in a Bloomberg News survey.

Lower Rating

Munich Re slipped 2.5 percent to 101.70 euros, the lowest price this month. The world’s biggest reinsurer was downgraded to “strong sell” from “hold” at Standard & Poor’s.

RWE AG dropped 2.2 percent to 51 euros, the lowest price since March 2009. Germany’s second-biggest utility declined to comment on a Westdeutsche Allgemeine Zeitung report that RWE expects 2011 earnings to drop by 1.5 billion euros ($1.95 billion) because of costs from Germany’s planned nuclear policy and lower electricity prices.

E.ON AG, the country’s largest utility, fell 2.9 percent percent to 21.65 euros. European utility shares lost 1.3 percent today, the biggest drop among 19 industry groups in the Stoxx Europe 600 Index.

Rational, a maker of industrial ovens, lost 6.7 percent to 143.25 euros for the biggest retreat since March 2009. HSBC cut its recommendation to “neutral” from “overweight."

‘‘The main downside risk is a slower-than-expected recovery of sales, which could coincide with a moderate increase in the cost base, thus leading to a higher dilution of profitability,’’ Dusseldorf-based analysts Richard Schramm and Juergen Siebrecht wrote in a report.

Beating Estimates

SAP rose 1 percent to 36.96 euros, the highest price since July. Oracle, the world’s second-largest software maker, gave a first-quarter earnings and sales forecast that topped the average analyst estimate, helped by an expansion into computer hardware.

Research In Motion, maker of the BlackBerry smartphone, said revenue this quarter will be as much as $5.55 billion and earnings per share will be as much as $1.70. Analysts had projected revenue of $4.82 billion and profit of $1.39 a share.

Infineon, Europe’s second-largest chipmaker, rose 2.2 percent to 4.62 euros. The company doesn’t rule out paying a special dividend after the sale of its mobile-phone chipmaking unit, Reuters reported today, citing Infineon Chief Executive Officer Peter Bauer’s interview with DAF investor television.

Metro AG, Germany’s biggest retailer, climbed 3 percent to 46.10 euros. Carrefour SA’s Chief Executive Officer Lars Olofsson said the world’s second-largest retailer plans to invest about 1.5 billion euros over 2 1/2 years to revive its superstore format in western Europe. The retailer also forecast higher sales and profit through 2015.

Volkswagen AG’s preferred shares rose 2.6 percent to 91.21 euros. Skoda Auto AS, the Czech unit of Volkswagen, plans to introduce a new small model ‘‘soon,” Hospodarske Noviny reported, citing Skoda’s chief designer Jozef Kaban.

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

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