German Stocks Drop After Rally as HeidelbergCement Falls

German stocks dropped after a two-day rally pushed the DAX Index to its highest level in a month.

HeidelbergCement AG slipped 1.5 percent as Societe Generale SA downgraded its rating on the world’s third-largest maker of cement. Commerzbank AG fell 3.1 percent, retreating for a fifth day. Salzgitter AG rallied the most in nine months after reporting a narrower loss for the first quarter. Carl Zeiss Meditec AG rose to its highest price in four months after quarterly profit and sales exceeded analysts’ estimates.

The DAX Index lost 0.3 percent to 9,581.45 at the close of trading in Frankfurt, trimming its gain this week to 0.3 percent. The benchmark remains 1.7 percent away from the record it reached on Jan. 17 as Russia’s annexation of Crimea and a separatist campaign in Ukraine raised concern that geopolitical tensions will disrupt trade and undermine Europe’s economic recovery. The HDAX Index fell 0.2 percent today.

“It’s a difficult time to invest and a lot of valuations are already stretched,” Carsten Hilck, who oversees about $6.9 billion at Union Investment Privatfonds GmbH, said by phone from Frankfurt. “We have a macroeconomic tailwind, but a geopolitical headwind with Ukraine and Russia which keeps dragging on. Earnings momentum is losing steam in Europe, and good dividend yields won’t look so good once bond yields rise.”

The DAX trades at 13.3 times the projected earnings of its members, down from a multiple of 14.2 in December that was the highest valuation in almost four years, data compiled by Bloomberg showed. It has a dividend yield of 2.83 percent.

German Exports

German exports fell 1.8 percent in March, according to a report from the Bundesbank today. They dropped 1.3 percent in February. Economists had predicted a gain of 1.3 percent. Imports unexpectedly retreated 0.9 percent in March, their first decline this year, the data showed.

HeidelbergCement slipped 1.5 percent to 61.16 euros. Societe Generale cut its rating on the stock to hold from buy, citing the lack of a catalyst to drive the shares higher. The stock trades at 15.4 times its projected earnings, up from a multiple of 13 times at the beginning of the year.

Commerzbank, which this week reported first-quarter profit that fell short of estimates, slid 3.1 percent to 11.66 euros.

Salzgitter gained 4.7 percent to 32.69 euros. Germany’s second-largest steelmaker said its first-quarter loss narrowed to 8.7 million euros ($12 million), from last year’s 16.1 million euros, helped in part by its 25 percent stake in refined-copper producer Aurubis AG. Salzgitter releases its full report on May 15.

Carl Zeiss

Carl Zeiss Meditec added 2.4 percent to 23.35 euros. The maker of ophthalmology equipment said earnings before interest and taxes climbed 11 percent to 37.2 million euros in the three months through March, more than the 33.2 million euros projected by analysts. Sales also rose 11 percent to 248.6 million euros, also beating estimates.

K+S AG rose 2.1 percent to 25.71 euros. JPMorgan Chase & Co. raised its rating on the potash producer to overweight, which is similar to a buy recommendation, from neutral. The brokerage said the price of the fertilizer ingredient will probably rise because inventories have fallen globally.

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