German Stocks Extend Weekly Drop; SAP Falls as Fresenius Gains

By Cornelius Rahn

Jan. 15 (Bloomberg) -- German stocks snapped a two-day advance, with the benchmark DAX Index extending its biggest weekly decline in a month, as analysts cut their recommendations for SAP AG and Salzgitter AG.

SAP, the biggest maker of business-management software, and Salzgitter, Germany’s second-largest steelmaker, declined at least 2.5 percent. Solarworld AG and Q-Cells SE led solar companies lower amid speculation the German government plans to cut subsidies by as much as 17 percent.

The DAX slid 0.6 percent to 5,954.32 as of 12:02 p.m. in Frankfurt, having declined 1.4 percent over the week. The gauge rallied 24 percent last year as Europe’s biggest economy emerged from recession, supported by rising exports, government stimulus measures and record-low interest rates in the region. The broader HDAX Index decreased 0.6 percent today.

JPMorgan Chase & Co., the first of the largest U.S. banks to report fourth-quarter results, may say today that profit more than tripled from the depths of the financial crisis in 2008, according to analyst estimates compiled by Bloomberg. Production in the U.S. probably rose in December for the fifth time in past six months, indicating manufacturing gave the economy a boost into 2010, economists said before a report.

SAP fell 2.6 percent to 34.44 euros, ending a two-day advance. Morgan Stanley cut the shares to “equal-weight” from “overweight,” while UniCredit SpA downgraded the stock to “hold” from “buy.”

Solar Shares

Salzgitter dropped 2.5 percent to 68.41 euros, poised for its lowest close this year. NordLB cut its recommendation for Salzgitter to “sell” from “hold.”

Q-Cells, a German solar-cell maker, fell 5.9 percent to 11.64 euros, the biggest drop since October. Solarworld declined 5.2 percent to 14.86 euros. SMA Solar Technology AG, a producer of alternating-current converters, sank 8.1 percent to 95.29 euros as WestLB AG cut the stock to “reduce” from “neutral.”

Reuters reported that Germany plans to cut subsidies for solar energy systems by 16 percent to 17 percent in April. Such a reduction would be “negative for the whole sector,” according to UniCredit. “The mentioned cuts are not only higher than the 10 percent expected, but in particular would also be implemented one quarter earlier,” analyst Michael Tappeiner wrote in a report today.

Germany won’t decide on how it will cut solar subsidies until next week at the earliest, Ronald Heinemann, a spokesman for the Environment Ministry said today by phone. People familiar with the government’s plans said it aims to reduce subsidies by 17 percent or 18 percent from July.

Fresenius SE, owner of the world’s biggest provider of kidney dialysis, advanced 2.5 percent to 51.40 euros. Merck KGaA, the European maker of the Erbitux cancer drug, climbed 1.9 percent to 66.49 euros.

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

Aareal Bank AG (ARL GY) increased 1.5 percent to 14.62 euros as the shares were raised to “buy” from “hold” at Equinet AG, which set a new price estimate of 18 euros and said Aareal is one of the “cheapest” banks in Europe relative to net asset values.

Celesio AG (CLS1 GY) advanced for a seventh day in the longest winning streak since November, gaining 2.6 percent to 20.96 euros. The German drug wholesaler was raised to “outperform” from “underperform” at CA Cheuvreux.

HeidelbergCement AG (HEI GY), the world’s third-biggest cement maker, slid 3.4 percent to 49.65 euros, following two days of gains. The stock was downgraded to “hold” from “buy” at ING Groep NV, which said in a note to clients that “the discount to the sector has narrowed and much of the optionality realized with balance sheet restructuring.”

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