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German Stocks Decline After U.S. GDP Unexpectedly Shrinks

Jan. 30 (Bloomberg) -- German stocks declined, paring a monthly gain, as a report showed the U.S. economy unexpectedly shrank in the fourth quarter.

Deutsche Boerse AG fell 1.4 percent after Deutsche Bank AG lowered its rating on the shares. HeidelbergCement AG added 1.7 percent as HSBC Holdings Plc reiterated its overweight recommendation on the stock.

The DAX Index declined 0.5 percent to 7,811.31 at the close of trading in Frankfurt. The measure has still risen 2.6 percent this month as U.S. lawmakers agreed on a compromise budget and American companies reported better-than-estimated earnings. The broader HDAX Index also fell 0.5 percent today.

“The concern in Germany is still where the next area of growth is coming from,” Justin Urquhart Stewart, who helps oversee about $6.8 billion at 7 Investment Management in London, said in a telephone interview. “As we see more of a rotation out of defensive stocks to growth stocks, the U.S. data will knock the wind out of the sales in terms of the confidence of the market.”

The volume of shares changing hands in companies listed on the equity benchmark was 9.2 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

U.S. gross domestic product, the volume of all goods and services produced, dropped at a 0.1 percent annual rate in the fourth quarter, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, when the world’s largest economy was still in the recession, Commerce Department figures showed today in Washington.

Fed Commitment

The Federal Reserve will probably renew its commitment to continue buying assets into next year at a policy decision today, according to a Bloomberg News survey of 44 economists. The Federal Open Market Committee concludes its two-day meeting and publishes its statement at 2:15 p.m. New York time.

Deutsche Boerse, operator of the Frankfurt stock exchange, retreated 1.4 percent to 48.97 euros as Deutsche Bank cut its recommendation on the shares to hold from buy, citing political plans to restrict high frequency trading.

Salzgitter AG, the country’s second-biggest steelmaker, declined 1.8 percent to 34.94 euros as Nomura Holdings Inc. downgraded the shares to neutral from buy, saying the company’s margins lag those of its peers.

Salzgitter posted fourth-quarter earnings before tax of about 14 million euros. The company said it will publish final figures on Feb. 27.

EON Beats

EON lost 0.8 percent to 13.22 euros, paring earlier gains of as much as 4 percent. Germany’s biggest utility said adjusted net income, which it uses to calculate its dividend, rose to 4.3 billion euros ($5.8 billion) from 2.5 billion euros in 2011. That compares with the 4.15 billion-euro median estimate of 24 analysts surveyed by Bloomberg. It estimates earnings on this basis of 2.2 billion to 2.6 billion euros for 2013.

Deutsche Bank, Germany’s biggest lender, climbed 0.6 percent to 37.15 euros, after earlier rising as much as 2.6 percent.

HeidelbergCement, the world’s third-largest cement maker, added 1.7 percent to 46.20 euros. HSBC Holdings Plc reiterated its overweight recommendation on the shares and named the stock its top pick among peers in the European building-materials industry, forecasting a strong recovery in earnings for cement companies.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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

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