German stocks dropped from a five-year high as the Bundesbank lowered its forecast for economic growth in 2013 and a report showed that consumer confidence in the U.S. fell more than forecast.
Deutsche Telekom AG retreated 1.9 percent as the country’s largest phone company lowered its dividend for the first time in three years. Wincor Nixdorf AG rose 3.6 percent after reiterating that earnings will increase in 2013.
The DAX Index slid 0.2 percent to 7,517.8 at the close in Frankfurt, paring the equity benchmark’s gain this week to 1.5 percent. The gauge jumped 1.1 percent yesterday to its highest level since January 2008 after a report showed German factory orders surged in October. The broader HDAX Index also retreated 0.2 percent today.
“The real economy in Europe remains troubled and in fact continues to weaken with even Germany increasingly suffering,” said Ioan Smith, a strategist at Knight Capital Europe Ltd. in London. “We have seen for a while there is a divergence between deteriorating economies and their financial markets. But today we may have seen some evidence that they will not be divergent for too long.”
German stocks fell as the Bundesbank reduced its forecast for the rate of growth in Europe’s biggest economy next year. The Frankfurt-based central bank cut its projection for 2013 to 0.4 percent from the 1.6 percent it had predicted in June.
In a separate release, the German Economy Ministry said industrial output dropped 2.6 percent in October as construction activity and the production of investment goods slumped. The median economist estimate had called for no change from September, according to a Bloomberg News survey.
In the U.S., a measure of consumer sentiment slid to 74.5 this month. Economists surveyed by Bloomberg News had predicted the Thomson Reuters/University of Michigan index would slip to 82 from a reading of 82.7 in November.
German stocks earlier erased their decline as a report showed that employers in the U.S. added 146,000 workers last month, more than the 85,000 that economists had forecast. The unemployment rate dropped to 7.7 percent, its lowest since December 2008, as the size of the labor force shrank.
Deutsche Telekom lost 1.9 percent to 8.42 euros after saying it will cut its dividend to 50 euro cents a share in 2013 and 2014. That’s a 29 percent reduction from the 70 cents promised for this year. The average analyst estimate had called for a payout of 60 cents a share for the next two years, data compiled by Bloomberg showed.
The company lowered its dividend to enable it to invest more in fast data networks in the U.S. and Germany. Capital expenditure will total almost 30 billion euros ($39 billion) over the next three years and will climb 18 percent in 2013.
ThyssenKrupp AG declined 1.3 percent to 16.23 euros after rallying 5.4 percent over the previous two days. Germany’s largest steelmaker may reduce its payout to shareholders next week, according to Bloomberg Dividend Forecasts.
Deutsche Lufthansa AG slid 2.1 percent to 13.30 euros, trimming its advance this week to 4.2 percent. Merck KGaA dropped 2.2 percent to 104.20 euros, the biggest decline on the DAX Index. It rallied 3.4 percent yesterday.
Deutsche Wohnen AG fell 0.8 percent to 14.81 euros after HSBC Holdings Plc lowered its recommendation for Germany’s largest residential landlord by market value to underweight from neutral, meaning investors should sell the shares.
Wincor Nixdorf jumped 3.6 percent to 34.60 euros after Europe’s biggest maker of automated teller machines reiterated that earnings and revenue will climb next year.