German stocks closed little changed, paring earlier losses, as gains in utilities offset Federal Reserve minutes that signaled the central bank is moving closer to slowing the pace of its stimulus.
RWE AG and EON SE climbed at least 1 percent, leading European utilities higher. Salzgitter AG slid 3.3 percent as MainFirst Bank AG advised investors to sell shares in the steelmaker. Allianz SE fell 1.3 percent as Citigroup Inc. downgraded its recommendation on the stock.
The DAX Index lost less than 0.1 percent to 9,196.08 at the close of trading in Frankfurt. The benchmark measure has surged 21 percent in 2013 as central banks around the world pledged to leave interest rates low for a prolonged period. The gauge is trading at 13.6 times its members’ projected earnings, near the highest valuation since 2009. The broader HDAX Index declined 0.2 percent today.
“It’s all about the central banks and what we might see next from the Fed in terms of the timing and type of tapering,” said Michael Kapler, an equities portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “After a great year for equities, investors will be using this opportunity for some profit taking. There’s a little uncertainty still in the market, but we may have a year-end rally.”
The minutes of the Federal Open Market Committee’s Oct. 29-30 meeting, released yesterday in Washington, showed policy makers “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”
Two weeks after that meeting, Fed Chairman nominee Janet Yellen said she will ensure the $85 billion of bond purchases are not scaled back too soon as the economic recovery in the U.S. remains fragile.
Fed Bank of St. Louis President James Bullard will speak on the economy and monetary policy after the close of European markets today, while Fed Bank of Richmond President Jeffrey Lacker is scheduled to speak in Asheboro, North Carolina from 12:30 p.m. local time.
In China, a gauge of manufacturing activity slipped for the first time in four months. The preliminary 50.4 reading for the November purchasing managers’ index released by HSBC Holdings Plc and Markit Economics trailed a 50.8 median estimate in a Bloomberg News survey. Levels above 50 indicate expansion.
RWE added 2.9 percent to 28.39 euros. Russian billionaire Mikhail Fridman may join a group of investors to bid for RWE’s oil and gas unit, Reuters reported, citing three unidentified people familiar with the matter. Annett Urbaczka, a spokeswoman for RWE, declined to comment on the report to Bloomberg News.
EON gained 1.3 percent to 14.09 euros. The Social Democratic Party’s call to increase nuclear fuel tax by 30 percent in Germany is no longer included in the working paper for government coalition talks, Frankfurter Allgemeine Zeitung reported, citing the document.
Salzgitter slid 3.8 percent to 31.11 euros as MainFirst cut its rating on the stock to underperform, similar to a sell recommendation, from outperform. The brokerage said the stock is expensive and reduced its 2014 projection for Salzgitter’s pretax profit to 12 million euros ($16 million). The average of 25 analysts estimates compiled by Bloomberg is for pretax profit of 55.6 million euros next year.
Allianz SE fell 1.3 percent to 126.85 euros as Citigroup cut its rating on the stock to neutral from buy, predicting growth for its asset-management unit will slow. Allianz trades at 9.5 times projected earnings, more than the five-year average of 8.1 times.