German Stocks Drop; Hypo Real Estate, Continental, E.ON Fall

By Stefanie Haxel

Dec. 4 (Bloomberg) — Germany’s DAX Index declined for the first time in three days as interest-rate cuts by European policy makers failed to ease concern the region’s economy will deteriorate further.

Hypo Real Estate Holding AG and Continental AG dropped at least 2 percent after Deutsche Boerse AG said the companies’ shares will be removed from the benchmark index this month. E.ON AG and RWE AG, Germany’s biggest utilities, retreated as power for next-year delivery slid to a 15-month low.

The DAX Index slipped 0.1 percent to 4,564.23 after gaining as much as 3.6 percent earlier. DAX futures expiring this month retreated 1.6 percent as of 6:07 p.m. in Frankfurt. The broader HDAX Index added less than 0.1 percent.

Germany’s DAX Index is down 43 percent this year as almost $1 trillion in credit-related losses and writedowns at financial firms worldwide push the economy toward a recession, damping the outlook for earnings.

European Central Bank President Jean-Claude Trichet said the euro region’s economy will shrink next year for the first time since 1993 after the bank delivered the biggest interest-rate cut in its 10-year history, reducing borrowing costs by 75 basis points to 2.5 percent.

The ECB’s decision came after the Bank of England today lowered its key rate by one percentage point to 2 percent and Sweden’s central bank cut borrowing costs by the most since 1992.

Hypo Real Estate lost 7.1 percent to 2.89 euros, the biggest drop in two weeks. The property lender will be replaced by Salzgitter AG in the DAX on Dec. 22. Salzgitter, Germany’s second-largest steelmaker, climbed 4.2 percent to 51.42 euros.

Continental, Utilities

Continental lost 2.4 percent to 35.82 euros. Europe’s second-biggest car-parts maker that’s being acquired by Schaeffler Group will be replaced by Beiersdorf AG, which slipped 0.7 percent to 43.42 euros today. The maker of Nivea skin creams aims to expand more quickly than the market next year, Chief Executive Officer Thomas Quaas said today.

E.ON, Germany’s biggest utility, lost 1.9 percent to 24.98 euros. RWE, the second-largest, sank 2.3 percent to 61.80 euros.

Electricity for next year in Germany, Europe’s biggest power market, slid to the lowest since Aug. 28, 2007, on expectation demand for power will weaken as economic growth in Europe stalls.

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

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