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.

Bayerische Motoren Werke AG (BMW GY) climbed 3.3 percent to 20.655 euros, the highest in more than two weeks. The world’s biggest luxury carmaker said it will almost triple purchases of auto parts in Mexico to help limit production costs.

Demag Cranes AG (D9C GY) dropped 5.3 percent to 15.60 euros after UBS AG cut its recommendation for the world’s largest maker of mobile harbor cranes to “sell” from “neutral.”

GEA Group AG (G1A GY) advanced 3.5 percent to 11.70 euros, the steepest increase in a week. The engineer whose machines milk a third of the world’s dairy cows, was rated “add” in new coverage at Commerzbank AG, which said the company is “deeply undervalued” relative to its peer group.

Jenoptik AG (JEN GY) added 3.6 percent to 3.78 euros, the highest in two weeks. Europe’s largest maker of traffic cameras will join Germany’s TecDAX Index of the country’s 30 largest technology stocks below the DAX on Dec. 22.

Nordex AG (NDX1 GY) advanced 1.7 percent to 9.67 euros after HSBC Holdings Plc upgraded the wind-mill maker to “overweight” from “neutral.”

Porsche SE (PAH3 GY) gained 6.5 percent to 48.38 euros. The maker of the 911 sports car will probably achieve its objective of buying 75 percent of Volkswagen AG in 2009, paving the way for full control of the carmaker, even as vehicle sales fall and the economy slows, Goldman Sachs Group Inc. analysts said.

Wincor Nixdorf AG (WIN GY) climbed 1.3 percent to 30.76 euros after the world’s second-largest maker of automated teller machines said it won an order from Shell Germany.

To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.
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