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German Stocks Little Changed as Investors Watch Earnings

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July 22 (Bloomberg) -- German stocks closed little changed, following the DAX Index’s first back-to-back weekly rallies since May, as investors weighed prospects for company earnings.

Deutsche Bank AG added 1.4 percent after a report that it plans to shrink its balance sheet by as much as 20 percent. Celesio AG jumped 9.3 percent after a person familiar with the matter said majority shareholder Franz Haniel & Cie GmbH has hired JPMorgan Chase & Co. to advise on a possible sale. SAP AG fell after saying Jim Hagemann Snabe will step down as co-chief executive officer next year.

The DAX Index fell less than 0.1 percent to 8,331.06 at the close of trading in Frankfurt. The equity benchmark has climbed 8.3 percent from a low on June 24 and advanced 1.5 percent last week. The broader HDAX Index also slipped less than 0.1 percent.

“Even though we expect a 7-to-9 percent drop in earnings for German companies this quarter, we are still pretty positive on results for the full-year,” said Matthias Jasper, head of equities at WGZ Bank AG in Dusseldorf. “The market will get additional support from a pickup in both the U.S. and German economies in the second half of the year, as well as better corporate earnings. We may see the DAX above the 9,000 level.”

Daimler AG, BASF SE, and Deutsche Boerse AG are the companies on the DAX scheduled to post second-quarter results this week.

U.S. Housing

Sales of previously owned homes in the U.S. fell in June to a 5.08 million annualized pace from a revised 5.14 million rate in the previous month, a report showed today. Economists had predicted a third consecutive month of gains, according to the median forecast in a Bloomberg survey.

The volume of shares changing hands in companies listed on the DAX was 26 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.

Deutsche Bank added 1.4 percent to 35.58 euros. Germany’s largest lender will reduce its assets to meet stricter rules on the proportion of its equity to loans, the Financial Times reported citing unnamed people familiar with the matter.

Celesio rallied 9.3 percent to 17.70 euros. Haniel is considering the sale of the full or a partial stake in the pharmaceutical distributor, or a partnership with another company, said the person, who asked not to be identified because talks are private. Celesio has attracted interest from at least three companies, the person said.

RWE Savings

RWE AG gained 2.6 percent to 23.05 euros, its biggest advance in more than three months. The utility will seek to add 500 million euros ($658 million) a year of savings to the 1 billion euros of cost reductions already planned, according to German newspaper Handelsblatt, which cited people close to the company.

Salzgitter AG increased 1.9 percent to 27.91 euros as Goldman Sachs Group Inc. upgraded the steelmaker to buy from neutral citing the stock’s valuation. The shares have lost 29 percent so far this year.

SAP lost 0.9 percent to 55.25 euros. The largest maker of business-management software will end its dual CEO structure in 2014, with Bill McDermott becoming the sole leader, the company said yesterday.

ProSiebenSat.1 Media AG dropped 4.8 percent to 33.75 euros after Liberum Capital Ltd. cut its rating on the stock to hold from buy, citing pressure in the German advertising market. The shares have still gained 59 percent so far this year.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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