German Stocks Drop, Led by E.ON; Carmakers Gain on Lower Oil

By Henrietta Rumberger

Aug. 8 (Bloomberg) -- German stocks fell for a second day as a decline in utilities overshadowed speculation lower oil prices will reduce costs for carmakers.

E.ON AG and RWE AG, the country's biggest utilities, retreated as power for next-year delivery headed for a fourth weekly drop. Bayerische Motoren Werke AG and Daimler AG climbed as crude futures traded near $118 a barrel in New York.

The benchmark DAX Index decreased 23.49, or 0.4 percent, to 6,520 at 1:59 p.m. in Frankfurt. The measure has still added 1.7 percent this week. DAX futures expiring in September fell 0.7 percent to 6,538. The HDAX Index of the country's 110 biggest companies retreated 0.3 percent to 3,315.24.

E.ON, the country's biggest utility, dropped 82 cents, or 2 percent, to 39.45 euros. RWE, the second-largest, slipped 88 cents, or 1.1 percent, to 75.10 euros.

Power for next year in Germany was poised for a 1.5 percent weekly decline as coal and emission prices fell. Corresponding Nordic, French and Dutch contracts also decreased.

BMW, the world's biggest luxury carmaker, rallied 1.44 euros, or 5.2 percent, to 29.065. Daimler AG, the second-largest, climbed 1.49 euros, or 3.7 percent, to 41.70.

Crude oil was on course for its fourth decline in five weeks as demand fell and the dollar gained, reducing the appeal of commodities as an inflation hedge.

Conergy AG rallied 77 cents, or 8.4 percent, to 9.94 euros. Germany's second-largest solar company reported second-quarter earnings before interest, tax, depreciation and amortization of 1.8 million euros ($2.74 million), its first profit since the start of a cost-reduction program.

Conergy is ``making good progress'' with a plan to cut jobs and should be able to fund severance packages and consultant fees this year, Chief Executive Officer Dieter Ammer said today.

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

BayWa AG (BYW GY) declined to the lowest in more than two weeks, dropping 1 euro, or 2.5 percent, to 38.50 euros. UniCredit Markets & Investment Banking cut its recommendation on the shares of the supplier of building material to ``sell'' from ``buy.''

Deutz AG (DEZ GY) slipped 20 cents, or 4.2 percent, to 4.52 euros as Credit Suisse Group cut its recommendation on shares of the maker of diesel engines for trucks and ships to ``underperform'' from ``neutral.''

ElringKlinger AG (ZIL2 GY) retreated 24 cents, or 1.4 percent, to 17.46 euros. UniCredit cut its share-price estimate for the supplier of car parts to 22 euros from 28. BHF-Bank and Landesbank Baden-Wuerttemberg also lowered their price projections.

Freenet AG (FNT GY) climbed for a third day, jumping 13 cents, or 1.2 percent, to 111.45 euros. The mobile-phone and Internet operator that agreed to buy competitor Debitel AG anticipates selling its digital subscriber line, or DSL, business this year, Chief Executive Officer Eckhard Spoerr said.

Gagfah SA (GFJ GY) lost 15 cents, or 1.5 percent, to 9.84 euros. UniCredit lowered its price projection on shares of Germany's largest publicly traded residential landlord to 10 euros from 10.20.

Hannover Re (HNR1 GY) retreated 60 cents, or 2 percent, to 29.79 euros. UniCredit lowered its share-price estimate for Germany's second-biggest reinsurer to 36 euros from 40.

ProSiebenSat.1 Media AG (PSM GY) added 30 cents, or 5.2 percent, to 6.02 euros, the fourth advance this week. Citigroup Inc. raised its price estimate on shares of Germany's biggest private broadcaster to 5.90 euros from 5.

Solar-Fabrik AG (SFX GY) gained 17 cents, or 1.9 percent, to 9.37 euros. The solar company that buys recyclable wafers from the semiconductor industry said first-half profit rose 20 percent to 1.8 million euros on solar power systems sales.

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