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German Stocks Decline as China Output Outweighs Euro Data

Jan. 23 (Bloomberg) -- German stocks fell the most in almost three weeks as data showing manufacturing in China probably contracted this month outweighed a report that euro-area factory output increased in January more than forecast.

Allianz SE dropped 2.7 percent after DZ Bank AG recommended investors sell shares of Europe’s largest insurer by market capitalization. Lanxess AG lost 2 percent after Barclays Plc lowered its rating on the chemicals company to the equivalent of a sell. Sky Deutschland AG rose 7 percent as Macquarie Group Ltd. said the pay-television operator’s shareprice decline so far this year made it an attractive investment.

The DAX Index retreated 0.9 percent to 9,631.04 at the close of trading in Frankfurt. The gauge has advanced 0.8 percent so far this year as the World Bank and the International Monetary Fund raised their forecasts for global growth. The broader HDAX Index fell 1 percent today.

“Investors are continuing to digest the Chinese data,” Keith Bowman, an equity analyst at Hargreaves Lansdown Plc in London, said by telephone. “China has been a concern for some time and is unlikely to go away during the course of the year. In Europe, we’re certainly seeing some stability largely due to the European Central Bank, but people are still nervous.”

The volume of shares changing hands in companies listed on the DAX was 33 percent higher than the average of the past 30 days, according to data compiled by Bloomberg.

Preliminary data from HSBC Holdings Plc and Markit Economics showed Chinese manufacturing probably contracted in January, for the first time in six months. The initial reading of 49.6 fell below all 19 economist estimates in a Bloomberg News survey. A number smaller than 50 means activity contracted.

Euro Manufacturing

An index based on a survey of purchasing managers in the euro-area manufacturing industry increased to 53.9 from 52.7 in December, London-based Markit Economics said in a statement today. The median estimate in a Bloomberg News survey had called for a reading of 53.

A gauge of German manufacturing output climbed to 56.3 from 54.3 in December, another report showed today. That topped the 54.6 estimated by economists.

Allianz dropped 2.7 percent, the most since June, to 126.55 euros. DZ lowered its rating on the insurer to sell from buy, saying its forecast for 2014 operating profit may disappoint because of a lower contribution from its asset-management operations.

Munich Re, the world’s largest reinsurer, slid 1.5 percent to 154.25 euros. A gauge of insurance-related companies posted the fourth-worst performance of the 19 industry groups on the Stoxx Europe 600 Index.

Lanxess Declines

Lanxess lost 2 percent to 45.11 euros. Barclays lowered its rating to underweight from equal weight, saying any recovery in earnings will lag the market’s high expectations as companies fight for volume growth.

K+S AG climbed 0.4 percent to 23.81 euros, paring earlier gains of as much as 1.5 percent. Barclays boosted its recommendation on the potash producer to equal weight from underweight, saying potash prices have started to recover after last year’s slide.

Commerzbank AG, Germany’s second-largest lender, added 2.6 percent to 13.35 euros.

Sky Deutschland rose 7 percent, its biggest gain since May, to 7.40 euros. The company’s shareprice decline this year makes it attractive for investors seeking exposure to growth in the German pay television market, Macquarie wrote in a note. Shares have fallen 10 percent so far this year.

Celesio AG added 4.5 percent to 24.01 euros. Franz Haniel & Cie. and Elliott Management Corp., the company’s two largest shareholders, are close to an agreement that would allow Franz Haniel sell a stake of about 75 percent in the drug distributor to McKesson Corp., Boersen-Zeitung reported, citing unnamed financial sources. The companies declined to comment, according to the newspaper.

Celesio declined 4.4 percent on Jan. 14 after McKesson said that an improved offer of 23.50 euros a share failed to pass the threshold needed for the deal to go through.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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