German Stocks Fall Amid Ukraine Tension as Merck Declines

German stocks retreated, with the benchmark DAX Index paring its biggest weekly rise since March, as Ukrainian forces confronted pro-Russian separatists in the country’s eastern region.

Merck KGaA dropped 1.6 percent after UBS AG lowered its recommendation on the drugmaker. Infineon Technologies AG fell 1.3 percent. Software AG slid 2.1 percent after posting quarterly sales that missed analysts’ estimates. Deutsche Telekom advanced 1.1 percent after Sprint Corp. was said to plan a bid for T-Mobile US Inc., in which the German company owns a majority stake.

The DAX Index slipped 0.5 percent to 9,556.02 at the close in Frankfurt. German markets were closed yesterday for the May Day holiday. The equity gauge has risen 1.6 percent this week as companies from Deutsche Bank AG to Bayer AG posted better-than-forecast earnings. It has still fallen 1.9 percent from a record on Jan. 17 as Russia annexed Crimea and the European Union responded with sanctions. The HDAX Index lost 0.4 percent today.

“Ukraine is still a burden for markets,” said Matthias Jasper, head of equities at WGZ Bank AG in Dusseldorf, Germany. “Without the Ukraine crisis, the DAX would probably have reached the 10,000 mark. Company results in Germany have been pretty good so far, with some exceptions. From a technical point of view, the picture is still positive.”

Ukraine sent armored vehicles and artillery to wrest control of Slovyansk from pro-Russian separatists. Acting President Oleksandr Turchynov said in a statement that forces loyal to his government have killed, wounded or captured many separatists in the country’s eastern region. The United Nations Security Council is preparing to hold an emergency meeting at Russia’s request.

U.S. Payrolls

U.S. Labor Department figures today showed that employers added 288,000 workers in April, the most since January 2012. The median forecast in a Bloomberg survey of economists called for a 218,000 increase. Unemployment dropped from 6.7 percent to 6.3 percent, the lowest level since September 2008 as fewer people entered the labor force.

A separate U.S. report today showed factory orders increased 1.1 percent in March, below economists’ forecast for a 1.5 percent advance.

Merck declined 1.6 percent to 119.65 euros after UBS downgraded the shares to hold from buy, citing competition for three of its flagship products and a drop in royalty income.

Infineon, Europe’s second-biggest semiconductor maker, dropped 1.3 percent to 8.27 euros. A gauge of technology-related companies was among the worst performers of the 19 industry groups on the Stoxx Europe 600 Index.

Software AG slid 2.1 percent to 26.54 euros after reporting first-quarter revenue of 208.9 million euros ($289.6 million), missing the average analyst estimate of 219.2 million euros.

Deutsche Telekom

Deutsche Telekom, which owns about 67 percent of T-Mobile, climbed 1.1 percent to 12.22 euros. Sprint Chief Financial Officer Joe Euteneuer and Treasurer Greg Block met with six banks last month to make debt arrangements to finance a possible takeover of T-Mobile, people familiar with the matter said.

Masayoshi Son, chief executive officer of SoftBank Corp., which owns about 80 percent of Sprint, is expected to make a formal bid in June or July, one of the people said.

Wacker Chemie AG added 4.7 percent to 88.50 euros after Bankhaus Lampe KG raised its rating on the stock to hold from sell. The brokerage forecast a significant improvement in first-quarter earnings, driven by the company’s polysilicon business. The chemical maker reports results on May 5.

Deutz AG climbed 2.8 percent to 6.18 euros. The manufacturer of engines for trucks, ships and farm equipment swung to profit in the first quarter as cost-cutting efforts gained traction. Earnings before interest and taxed totaled 1.9 million euros compared with a loss of 6.4 million euros a year earlier, the Cologne-based company said.

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