German Stocks Decline; Beiersdorf, Volkswagen Shares Lead Drop

By Cornelius Rahn

Jan. 12 (Bloomberg) -- German stocks declined for the first time in three days after Alcoa Inc. began the U.S. earnings season with a lower-than-estimated profit.

The benchmark DAX Index fell 0.7 percent to 5,995.81 as of 10:53 a.m. in Frankfurt, heading for its biggest drop this year. The gauge gained 24 percent last year as government spending, record-low interest rates and recovering exports helped Europe’s largest economy to exit recession. The broader HDAX Index decreased 0.7 percent today.

Alcoa, the largest U.S. aluminum producer, posted fourth- quarter earnings that trailed estimates as the company conducted a higher number of metals trades that boosted revenue while carrying no profit. The shares sank 6.9 percent to $16.24 in German trading.

China’s central bank today sold bills at a higher yield for the second time in a week, increasing the likelihood that policy makers will raise the benchmark interest rate in the first half of the year. The third-largest economy grew an estimated 8.5 percent last year, leading the world from the worst recession since World War II.

Beiersdorf AG, the German maker of Nivea skin creams, fell 2.6 percent to 44.05 euros. The company said 2009 profit fell about 33 percent as sales of beauty products and adhesive tapes slumped in the economic crisis.

Volkswagen AG, Europe’s largest automaker, snapped four days of gains, declining 2.2 percent to 65.45 euros. Seat, Volkswagen’s Spanish unit, may cut 330 non-production jobs in Spain after a decline in demand, Agence France-Presse reported, citing James Muir, Seat’s chairman.

BofA Merrill Lynch Global Research raised the allocation of equities in its monthly investment strategy report today to 65 percent of total assets, from 60 percent. Strategist Michael Hartnett said investors should cut investments in bonds to 30 percent, from 35 percent previously, and hold 5 percent in cash.

The following shares also rose or fell in German markets. Stock symbols are in parentheses.

Draegerwerk AG (DRW3 GY), a German maker of medical equipment, advanced for a fourth day, adding 1.9 percent to 36 euros. The stock was upgraded to “buy” from “hold” at Equinet AG.

OHB Technology AG (OHB GY) plunged 4.9 percent to 14.66 euros, a second day of declines. The German aerospace company as cut to “neutral” from “overweight” at HSBC Holdings Plc.

SGL Carbon SE (SGL GY), the world’s largest maker of carbon and graphite products, jumped 6.1 percent to 23.95 euros, its biggest gain since October. The shares were raised to “buy” from “neutral” at Goldman Sachs group Inc., which added the stock to its “conviction buy” list.

Solarworld AG (SWV GY), a German solar company, dropped 2 percent to 16.03 euros. Germany could bring forward a 9 percent cut in solar subsidies to the middle of the year from the end of 2010, Financial Times Deutschland cited Solarworld Chief Executive Officer Frank Asbeck as saying. Conergy AG (CGY GY) slumped 4.4 percent to 82.9 cents, its second day of declines.

Tognum AG (TGM GY), a diesel-engine maker, slid 3.4 percent to 12.64 euros, its first decline in four days. Tognum was cut to “neutral” from “buy” at Goldman Sachs.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net