German Stocks Fall on Lower Business Confidence; Daimler Slips

By Henrietta Rumberger

July 24 (Bloomberg) -- Germany's benchmark DAX index ended its six-day advance as the country's business confidence fell the most since the Sept. 11 terrorist attacks in 2001 and Daimler AG cut its forecast for earnings this year.

Daimler, the world's second-largest luxury carmaker, tumbled the most since Sept. 2001. Infineon Technologies AG, Europe's second-largest maker of semiconductors, declined after Die Welt reported its cost-cutting plans face resistance. Siemens AG dropped as ABB Ltd., the world's biggest builder of electricity grids, reported earnings that missed analysts' estimates. TUI AG also fell.

The benchmark DAX Index decreased 82.79, or 1.3 percent, to 6,453.3 as of 1:16 p.m. in Frankfurt. DAX futures expiring in September lost 87.5, or 1.3 percent, to 6,498. The HDAX Index of the country's 110 biggest companies slipped 1.3 percent to 3,284.19.

``The Ifo index weighs on the market as it brings investors back into reality, showing that the economic problems are still there, they haven't disappeared,'' said Tilmann Galler, a client portfolio manager at JPMorgan Asset Management in Frankfurt, who helps oversee about $25 billion.

The Munich-based Ifo institute said its business climate index slipped to 97.5 from 101.2 in June as record oil prices and higher interest rates dimmed the outlook for growth, signaling growth is faltering in Europe's biggest economy. That's the weakest reading since September 2005. Economists expected a decline to 100.1, according to the median of 40 forecasts in a Bloomberg News survey.

Daimler

Daimler plunged 3.79 euros, or 8.9 percent, to 38.77 euros. Bayerische Motoren Werke AG, the world's biggest luxury carmaker, lost 1.25 euros, or 3.9 percent, to 30.62. Volkswagen AG, Europe's largest carmaker, retreated 4.42 euros, or 2.1 percent, to 205.13.

Daimler cut its forecast for earnings this year after second-quarter profit declined 25 percent. Net income dropped to 1.395 billion euros ($2.19 billion), or 1.40 per share, from 1.85 billion euros, or 1.74 euros per share, a year earlier, the automaker said today. Six analysts surveyed by Bloomberg News had forecast profit of 1.38 billion euros.

Profit before earnings and taxes will be above 7 billion euros, compared with an earlier forecast of ``well above'' 7.7 billion euros because of slowing growth, rising costs for steel and energy and the dollar's decline, Daimler said.

``Daimler's earnings show that the weakening of the global economy cannot be compensated and this weighs on the entire sector today,'' said Folker Hellmeyer, chief analyst at Bremer Landesbank Kreditanstalt.

Infineon

Infineon fell for a third day this week, losing 12 cents, or 2.4 percent, to 4.96 euros. Its cost-cutting plans face resistance from the company's supervisory board, Die Welt reported, citing employee representative and supervisory board member Wigand Cramer.

Separately, Infineon's memory-chip unit Qimonda AG plans to report fiscal third-quarter results after the official close of the U.S. markets.

Siemens, Europe's largest engineering company, declined 1.16 euros, or 1.6 percent, to 72.67 euros. ABB reported profit that missed estimates for the first time in three years.

TUI retreated 19 cents, or 1.2 percent, to 15.32 euros. The tour operator received insufficiently high bids for its Hapag- Lloyd shipping line, and the unit won't be sold for less than 4 billion euros ($6.3 billion), Die Welt reported today, citing unidentified people close to the auction.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

Amadeus Fire AG (AAD GY) jumped 94 cents, or 8.2 percent, to 12.40 euros. The temporary-employment agency said operating profit in the first six months rose to 7.6 million euros from 6.4 million euros in the year-before period.

Comdirect Bank AG (COM GY) sank 37 cents, or 5 percent, to 7.05 euros, the lowest in six months. HSBC Holdings Plc lowered its price estimate on shares of Germany's biggest online broker 9.1 percent to 11 euros.

Deutsche Bank AG (DBK GY), Germany's largest bank, rose for a second day, gaining 92 cents, or 1.5 percent, to 61.32 euros.

Credit Suisse Group AG, Switzerland's second-biggest bank, said second-quarter earnings dropped 62 percent, less than analysts estimated as the investment banking unit returned to profit.

Deutsche Postbank AG (DPB GY) slipped 50 cents, or 1 percent, to 48.08 euros, the third decline this week. Lehman Brothers Holdings Inc. cut its share-price estimate for Germany's biggest consumer bank by clients 2.1 percent to 46 euros.

Merck KGaA (MRK GY) jumped 3.20 euros, or 4.3 percent, to 78.30. Deutsche Bank AG and Dresdner Kleinwort both raised their recommendations for the maker of the Erbitux cancer drug to ``buy'' from ``hold.''

``Especially in a recessionary period, we view Merck as a defensive value play with decent visibility for double-digit earnings growth,'' Deutsche Bank analyst Holger Blum in Frankfurt wrote in a note to investors today.

Puma AG (PUM GY) climbed 8.22 euros, or 4.1 percent, to 209.18 euros. Sales of Europe's second-largest sporting goods maker climbed 6.3 percent to 576.8 million euros, according to PPR SA, which controls the German athletic-shoe and sportswear maker.

SGL Group (SGL GY) jumped 2.44 euros, or 5.8 percent, to 44.74, the fourth gain in a row. Dresdner Kleinwort upgraded shares in the world's largest maker of carbon graphite products to ``buy'' from ``hold.''

To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.