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German Stocks Decline Amid Earnings Reports; EON Drops

German stocks declined, paring a two-day advance that saw the DAX Index reach a record, as U.S. lawmakers reached agreement on ending the debt-limit impasse, and brokers downgraded companies.

Deutsche Telekom AG, Germany’s biggest telephone-service provider, fell 1.8 percent after Bank of America Corp. cut its rating. EON AG, the country’s largest utility, slid 3 percent after UBS AG reduced its recommendation on the stock.

The DAX Index slipped 0.4 percent to 8,811.98 at the close of trading in Frankfurt, after earlier falling as much as 0.9 percent. The gauge has still risen 2.5 percent so far this month, extending its 2013 increase to 16 percent, amid optimism that the U.S. Congress would end the fiscal impasse and Janet Yellen, nominated to head the Federal Reserve, won’t rush to withdraw stimulus. The HDAX Index lost 0.3 percent today.

“Everybody expected the solution in the U.S.,” Soeren Steinert, who helps manage about $24 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, wrote in an e-mail. “It is a case of buy the rumour, sell the fact. There is no catalyst for a further uptrend at the moment. Therefore, we are seeing profit taking.”

In the U.S., President Barack Obama signed into law a measure to extend the nation’s borrowing authority into early 2014 and end the government shutdown that started Oct. 1. The deal avoided a default of the world’s biggest economy and means that federal workers will return to their jobs from today.

Deutsche Telekom dropped 1.8 percent to 11.71 euros after Bank of America downgraded the shares to neutral from buy, citing renewed competition in Germany and the U.S. Positive catalysts for the stock, including potential deals in the U.K. and U.S., are largely priced in, according to Bank of America.

EON Falls

EON declined 3 percent to 13.81 euros after UBS downgraded the stock to sell and added it to its least preferred list. “Earnings momentum is still negative and even a GDP recovery won’t change the weak power market outlook,” UBS analysts wrote in a note to clients.

Lanxess AG advanced 2 percent to 50.52 euros. The chemical maker’s Keltan Elastomers business unit will increase prices for all of its Keltan EPDM grades, used in the auto sector for door sealants, hoses, belts and anti-vibration parts, by as much as $150 per metric ton in Asia, according to a statement on its website.

Deutsche Lufthansa AG climbed 3.1 percent to 14.49 euros. UBS increased its target price on Europe’s second-largest carrier to 16.75 euros from 16 euros, citing its steep fall relative to other airlines, the return of capacity constraint in the sector, and positive expectations for third-quarter results.

The volume of shares changing hands in DAX-listed companies was 1.4 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

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