German Stocks Decline on China Manufacturing Report

German stocks fell as the minutes of the Federal Reserve’s last meeting signaled stimulus cuts will continue and a report showed Chinese manufacturing probably contracted this month.

Henkel AG slid the most in since November 2012 after the maker of Schwarzkopf hair spray and Fa deodorant delivered its forecasts for 2014. TUI AG (TUI1) retreated 5.4 percent after Monteray Enterprises Ltd. sold a 15.7 percent stake in Europe’s largest tour operator. Hochtief AG (HOT) climbed after its Leighton Holdings Ltd. subsidiary reported profit that beat analysts’ projections.

The DAX Index (DAX) lost 0.4 percent to 9,618.85 at the close of trading in Frankfurt. The benchmark has still jumped 5.5 percent from its low on Feb. 5 as a report showed Chinese imports surged in January. Germany has the largest current-account surplus with China of any European country, according to the International Monetary Fund. The HDAX Index also retreated 0.4 percent today.

“The worries investors have about China’s economy continue after today’s data and will remain a focus going forward,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “In addition, the Fed’s minutes show tapering will continue, which doesn’t help sentiment after recent weaker macroeconomic data.”

Fed policy makers said they would soon have to modify their guidance on interest rates, according to the minutes of their January meeting released yesterday. The central bank had committed to leave rates near zero while unemployment remained above 6.5 percent.

Fed Minutes

“Participants agreed that, with the unemployment rate approaching 6.5 percent, it would soon be appropriate for the committee to change its forward guidance in order to provide information about its decisions regarding the federal funds rate after that threshold was crossed,” according to the record of the meeting, the final one led by Ben S. Bernanke before the end of his term as chairman.

A Chinese manufacturing index fell to its lowest level in seven months, a report showed today. The preliminary reading for February of 48.3 for the purchasing managers’ index from HSBC Holdings Plc and Markit Economics came in lower than January’s final figure of 49.5 and the median estimate of 49.5 in a Bloomberg News survey. A number below 50 means activity shrank.

Henkel dropped 4.2 percent to 81.22 euros after saying earnings before interest and taxes as a proportion of sales will increase to about 15.5 percent this year. The company had an Ebit margin of 15.4 percent in 2013. Henkel added that adjusted earnings per preferred share will increase by a high single-digit percentage in 2014.

Henkel, TUI

DZ Bank AG analyst Herbert Sturm called the outlook cautious, while Exane BNP Paribas analysts including Eamonn Ferry said the company had increased its forecast for earnings per share by less than in previous years.

TUI sank 5.4 percent to 13.02 euros after Monteray, which is owned by billionaire John Fredriksen, sold the 15.7 percent stake for 521 million euros ($713 million). That leaves the Norwegian investor with 4.4 percent of TUI’s capital, the tour operator said in a statement.

Hochtief gained 1.6 percent to 63.08 euros. Leighton (LEI) reported its adjusted profit for 2013 and gave a forecast for 2014 that beat analysts’ projections. Hochtief holds a 58.77 percent stake in Australia’s largest construction company.

Deutsche Bank

Deutsche Bank AG (DBK) slipped 0.9 percent to 35.25 euros. Germany’s biggest lender will pay about 925 million euros to settle a 12-year dispute with the heirs of Leo Kirch over the collapse of his media group, according to two people familiar with the matter. Deutsche Bank said the settlement, after existing provisions, would reduce profit in the fourth quarter of last year by about 350 million euros.

Porsche Automobil Holding SE fell 1.6 percent to 78.62 euros after saying it will recall all 911 GT3 vehicles from the current model year. The automobile manufacturer advised people against driving the high-performance sports car after engine failures led to two vehicles catching fire.

Puma SE dropped 2.4 percent to 203 euros after Europe’s second-biggest sporting-goods maker reported Ebit of 191.4 million euros for 2013, down from 290.7 million euros in 2012. That missed the 206.1 million-euro average of 11 estimates compiled by Bloomberg.

GEA Group AG (G1A) slipped 0.9 percent to 34.28 euros after Goldman Sachs Group Inc. lowered the maker of food-processing equipment to neutral from buy, citing the stock’s valuation. The shares trade at 15.7 times estimated earnings, more than their average of 14 over the last five years.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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