German Stocks Drop as Daimler, Volkswagen Fall; Merck Gains

By Cornelius Rahn

Jan. 20 (Bloomberg) -- German stocks fell, with the DAX Index retreating for the first time in three days, as China, the driver of the global recovery, signaled that it may rein in stimulus measures.

Daimler AG and Volkswagen AG lost at least 1 percent as European automakers declined. Solar companies retreated as a German parliamentarian said subsidies for the industry may be reduced more drastically than previously forecast. Merck KGaA surged 3.3 percent as the Republicans in the U.S. won the Senate seat for Massachusetts, imperiling health-care legislation in Congress.

The benchmark DAX Index slipped 0.2 percent to 5,964.81 as of 12:04 p.m. in Frankfurt. The measure has climbed 63 percent from last year’s low on March 6 as companies reported better- than-estimated earnings and the Europe’s largest economy exited recession. The broader HDAX Index also lost 0.2 percent today.

China’s Premier Wen Jiabao yesterday said China will manage the pace of credit growth and the nation’s chief banking regulator, Liu Mingkang, said in an interview that some banks were asked to reduce lending after a record 9.59 trillion yuan ($1.4 trillion) in new loans were made last year. U.S. housing starts were probably little changed in December as rising foreclosures and inclement weather kept builders at bay, economists said before a report today.

Daimler, VW

Daimler, the world’s second-biggest maker of luxury cars, slumped for a second day, losing 1.8 percent to 36.06 euros. Turkey’s car market won’t improve in 2010, according to Wolf Dieter Kurz, chairman of the Mercedes-Benz Turk AS, the unit of Daimler AG in Turkey. Volkswagen and Bayerische Motoren Werke AG retreated 1.2 percent to 60 euros and 0.9 percent to 32.13 euros, respectively.

Phoenix Solar AG, a company which builds and operates solar plants, declined 4.9 percent to 34.62 euros, heading for its lowest close in two months. Phoenix was removed from Goldman Sachs Group Inc.’s “conviction buy” list, with analysts citing a “less compelling” relationship between risk and reward compared with competitor SMA Solar Technology AG. SMA Solar shares slipped 4.4 percent to 86.64 euros.

Solar Shares

Q-Cells SE fell 2 percent to 10.72 euros and and Solarworld AG slipped 1.9 percent to 14.55 euros. Chancellor Angela Merkel’s Christian Democratic Union may press for deeper cuts in solar subsidies than previously estimated by the government, the party’s energy spokesman in parliament, Joachim Pfeiffer, said.

Merck KGaA, the European maker of the Erbitux cancer drug, rose 3.3 percent to 68.47 euros for its biggest advance in two months. Republican Scott Brown beat once-favored Democratic state Attorney General Martha Coakley for a Senate seat held by the late Edward M. Kennedy for nearly half a century. His victory increases Republican Senate numbers to 41, enough to block votes on an overhaul of the U.S. health-care system, President Barack Obama’s top legislative goal.

Fresenius Medical Care AG, the world’s biggest provider of kidney dialysis, and parent Fresenius SE added 1.3 percent to 38.27 and 1 percent to 51.51 euros, respectively. Health care companies were among the best performers in Europe’s Dow Jones Stoxx 600 index today.

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

Manz Automation AG (M5Z GY), a solar-cell machine maker, surged 5.8 percent to 63.40 euros, its first gain in six days. Manz had its share-price estimate raised to 95 euros from 79 euros at Goldman Sachs.

MorphoSys AG (MOR GY), a drugmaker, climbed 4.2 percent to 17.74 euros, its biggest rise since November. The company and chemical producer Wacker Chemie AG will expand their existing cooperation in the use of Wacker’s Esetec technology for the production of antigen material. Wacker (WCH GY) shares gained 2.4 percent to 116.45 euros.

Pfleiderer AG (PFD4 GY), a German laminate-flooring maker, jumped 5 percent to 7.35 euros. The company said it concluded a sale of 2.6 million of its own shares at a value of 18.5 million euros ($26.3 million).

Praktiger AG (PRA GY), Germany’s second-biggest home- improvement retailer, dropped 1.8 percent to 6.58 euros. The shares were removed from CA Cheuvreux’s “selected list” and reduced to “outperform.”

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