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German Stocks Decline on November Exports, Factory Orders

German stocks declined for a second day as exports from Europe’s largest economy and factory orders fell, while investors awaited the start of the fourth-quarter U.S. earnings season.

Lanxess AG (LXS) led chemical makers lower, sliding 3.3 percent. Munich Re dropped 1.7 percent after Bank of America Corp. downgraded its recommendation on the stock. 4SC AG (VSC) rose 3 percent after it obtained a key patent for its anti-cancer compound in Europe.

The DAX (DAX) retreated 0.5 percent to 7,695.83 at the close of trading in Frankfurt. The gauge has still gained 1.1 percent this year as U.S. lawmakers struck a deal to prevent most scheduled tax increases and delay spending cuts in the world’s largest economy. The broader HDAX Index lost 0.4 percent today.

“What happened really from July, August 2012 onwards was that weakening of the German economy and you saw that yet again today with the worse-than-expected export numbers,” Bob Parker, senior adviser at Credit Suisse Asset Management in London, said on Bloomberg Television. “Although German industry is super competitive with the euro at 1.30,” recession in southern Europe, mediocre growth in the United States and slower growth in Asia mean that demand, not competitiveness, remains the problem, he said.

The volume of shares changing hands on the DAX was 28 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

Exports Disappoint

German exports declined in November more than economists had forecast as the sovereign-debt crisis weighed on euro-area demand. Exports adjusted for working days and seasonal changes fell 3.4 percent from October, the steepest decline in more than a year, the Federal Statistics Office in Wiesbaden said today. Economists had predicted a 0.5 percent drop, according to the median of nine estimates in a Bloomberg survey.

German factory orders, adjusted for seasonal swings and inflation, dropped 1.8 percent from October, when they jumped a revised 3.8 percent, the Economy Ministry in Berlin said today. Economists had predicted a 1.4 decline, according to the median of 24 forecast in a Bloomberg News survey. From a year earlier, orders fell 1 percent when adjusted for work days.

Economic confidence in the euro area increased more than expected in December even as the 17-nation currency bloc remained mired in its second recession in four years.

An index of executive and consumer sentiment in the euro region rose to 87 from 85.7 in November, the European Commission in Brussels said today. Economists had forecast an increase to 86.3, according to the median of 24 estimates in a Bloomberg News survey.

U.S. Earnings

Alcoa Inc., the largest American aluminum producer, will unofficially start the U.S. fourth-quarter earnings-reporting season after the market closes today. Fourth-quarter profits at S&P 500 companies grew an average 2.9 percent, according to data compiled by Bloomberg. Excluding financial companies, income increased 0.5 percent.

Lanxess, a German chemical maker, dropped 3.3 percent to 63.27 euros, its fourth day of losses. MainFirst Bank downgraded the stock to underperform, the equivalent of a sell rating, citing its high exposure to the auto and tire industry where demand for its products is weakening amid growing capacity.

Insurers Downgraded

Munich Re slid 1.7 percent to 135.95 euros. Bank of America’s Merrill Lynch unit cut its rating on the world’s biggest reinsurer to underperform from neutral, meaning investors should sell the shares. The brokerage cited lacklustre earnings prospects.

Hannover Re, the world’s fourth-biggest reinsurer, dropped 1.2 percent to 58.97 euros. Merrill Lynch downgraded the stock to neutral from buy.

“After a stellar year in 2012, we struggle to see how the sector can post meaningful outperformance in 2013 unless macro conditions are particularly accommodative,” the brokerage said.

Bayerische Motoren Werke AG (BMW) led automakers lower, falling 3.4 percent to 73.21 euros. Volkswagen AG, the world’s second- largest carmaker, declined 1.1 percent to 174 euros.

TUI AG (TUI1), the owner of Europe’s largest travel company, slid 2.8 percent to 7.56 euros. The shares were downgraded to equal weight, the equivalent of a hold rating, from overweight at Morgan Stanley.

4SC rose 3 percent to 2.09 euros, paring gains of as much as 11 percent. The German biotechnology company said it obtained European patent protection for its liver cancer drug, Resminostat.

Beiersdorf AG (BEI), the maker of Nivea skin cream, added 2.4 percent to 62.30 euros. Nomura Holdings Inc. raised the price target for the company to 72 euros from 60 euros, saying that the strategic priorities set last year should enable the company’s consumer division to realize its potential in 2013.

Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s two-largest lenders, rose 1.2 percent to 36.22 euros, and 1 percent to 1.60 euros, respectively.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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