Jan. 4 (Bloomberg) -- German stocks slipped, led by ThyssenKrupp AG, RWE AG and E.ON AG, after the Federal Reserve signaled U.S. interest rate cuts mightn't come as fast as investors expected.

The DAX Index retreated 36.62, or 0.6 percent, to 6654.7, as of 1:50 p.m. in Frankfurt. DAX futures expiring in March slid 37.5, or 0.6 percent, to 6703.5. The HDAX Index of the country's 110 biggest companies declined 20.13, or 0.6 percent, to 3434.2.

``The market is taking a break after a fulminant start to the new year,'' said Petra von Kerssenbrock, an analyst at Commerzbank AG in Frankfurt. ``There may be some profit taking before investors reposition themselves.''

The DAX added 1.5 percent in the first two trading days of the year on speculation profit growth will be sustained in 2007.

The Fed's Dec. 12 meeting said the ``predominant concern'' is rising prices and the risk of a slowdown is more than anticipated. The comments heightened speculation the policy makers probably won't lower interest rates any time soon.

ThyssenKrupp, the country's largest steelmaker, retreated 1.18 euros, or 3.3 percent, to 34.78 euros. The shares more than doubled in 2006 delivering the best performance on the DAX.

Shares of Salzgitter AG, the nation's second-biggest steel producer, lost 5.15 euros, or 5.2 percent, to 94.16. Last year the company's share price also more than doubled. Salzgitter was cut to ``neutral'' from ``outperform'' today by Raoudha Bouzekri, a Paris-based analyst at Exane BNP Paribas.

Steel prices will ``continue to come under pressure'' in the first half of 2007 after a strong second half last year, according to industry analysts at Societe Generale.

Losing Momentum

``The momentum is against the industry,'' said Luc Pez, an analyst in Paris with Societe Generale, which has an ``underweight'' recommendation on steel and metal stocks.

E.ON, the world's biggest utility by sales, declined 2.19 euro, or 2.1 percent, to 101.56 euros. RWE, the country's second- largest utility, slipped 1.95 euros, or 2.3 percent, to 83.54 euros. Utilities were the third-biggest gainers in the broad- based European Dow Jones Stoxx 600 Index last year.

Equity strategists at Lehman Brothers Holdings Inc., Goldman, Sachs & Co. and Deutsche Bank AG recommended investors to be ``underweight'' in utilities stocks in 2007 when they published their outlooks for the new year in December pointing to their high valuations.

The following stocks also rose or fell in the German market. Stock symbols are in parentheses.

Bayerische Motoren Werke AG (BMW GY), the world's largest luxury carmaker, slipped 52 cents, or 1.2 percent, to 43.53 euros. Citigroup Inc. cut its recommendation to ``hold'' from ``buy'' and lowered its price estimate to 46 from 50 euros.

John Lawson, an analyst at Citigroup in London, cited ``new exchange rate negatives'' and an increasing focus on carbon- dioxide emissions as reasons for the downgrade.

DaimlerChrysler AG (DCX GY) retreated 43 cents, or 0.9 percent, to 47.07 euros. The world's fifth-largest automaker said its U.S. sales of cars and trucks fell 1 percent to 218,530 vehicles in December. Sales at the Mercedes-Benz division dropped 9.9 percent to 28,115.

Deutsche Telekom AG (DTE GY), the region's largest phone company, added 30 cents, or 2.1 percent, to 14.37 euros.

``We have started to use telecommunications as a replacement for utilities as a defensive play in our portfolios,'' said Philipp Musil, who helps oversee about $24 billion at Vienna- based Constantia Privatbank AG. ``Last year's underperformer may be this year's outperformer.''

Deutsche Telekom shares lost 1.7 percent last year while the DAX soared 22 percent. Equity strategists at Lehman Brothers Holdings Inc., Goldman, Sachs & Co. and JPMorgan Chase & Co. recommended investors be ``overweight'' in telecom stocks in 2007 when they published their outlooks for the new year in December.

Grenkeleasing AG (GLJ GY) increased 85 cents, or 2.2 percent, to 40.35 euros. Citigroup Inc. raised its recommendation for shares of the company that buys and leases technology equipment to ``buy'' from ``hold.''

Separately, Sal. Oppenheim jr. & Cie. raised its price estimate for the shares by 13 percent to 45 euros.

Merck KGaA (MRK GY) gained 4.2 euros, or 5.2 percent, to 84.92 euros. The drugmaker controlled by the Merck family may be looking to sell its generic-drugs division to help finance the acquisition of Swiss biotechnology company Serono SA, Handelsblatt said. Merck spokesman Steffen Mueller declined to comment on the report.

Separately, Dresdner Kleinwort raised its recommendation on the shares to ``buy'' from ``add'' in a report published today.

Praktiker AG (PRA GY) advanced 20 cents, or 0.7 percent, to 28.2 euros. Deutsche Bank AG raised its recommendation for shares of the country's second-biggest home-improvement retailer to ``buy'' from ``hold,'' citing the acquisition of competitor Max Bahr Holzhandlung GmbH & Co. KG last year.

Schwarz Pharma AG (SRZ GY) gained 2.41 euros, or 2.4 percent, to 101.01 euros. UCB SA, the Belgian maker of the allergy drug Zyrtec, said its takeover of Schwarz Pharma was successful. Investors tendered more than 87 percent of outstanding shares by the end of the offer period on Dec. 28, it said.

Volkswagen AG (VOW GY) slipped 94 cents, or 1.1 percent, to 84.54 euros. Europe's largest carmaker said U.S. sales in December plummeted 23 percent as demand for the new Passat and Jetta models waned. v

In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REIT's. In British English, the usage of the word share alone to refer solely to stocks is so common that it almost replaces the word stock itself.

A share is one of a finite number of equal portions in the capital of a company, entitling the owner to a proportion of distributed, non-reinvested profits known as dividends and to a portion of the value of the company in case of liquidation. Shares can be voting or non-voting, meaning they either do or do not carry the right to vote on the board of directors and corporate policy. Whether this right exists often affects the value of the share.

In 1791 Abraham Schaaffhausen founded his private bank, one of the first and most important financial resources for the growing Rhineland-Westphalia area and its involvement in heavy industry. In 1848, the bank found itself facing solvency issues, and on March 29th, 1848 they were forced to cease payment. Under national guarantees, and acting upon the advice of the Prussian Finance Minister (and later founder of the Disconto-Association), David Hansemann, the bank was allowed to be salvaged by other bankers under the leadership of Gustav Mevissen. To this end, the Prussian government first sanctioned a bank in the form of a joint stock company - the A. Schaaffhausen'schen Bank Association. As soon as 1852 the bank was able to pay back the aid it had received from the state.

In competition with both of the other big banks in the Rhineland, the Essener Credit-Insitute and the Bergisch-Märkischen Bank, the Bank Association was able to augment itself with branches in western Germany. In 1904 it was able to take over the Westdeutsche Bank (located in Bonn). Between 1904 and 1909 the Bank Association was involved in a joint venture with the Dresdner Bank. In 1913 the A. Schaaffhausen'sche Bank Association was the largest German regional bank and was involved in numerous industial interests.

In 1914 the Bank Association was taken over by the Disconto-Association, although it remained a stand-alone credit institute until 1929. Not until the fusion of the Disconto-Association with the Deutsche Bank in 1929 was the Bank Association completely merged with the Disconto-Association and then became a part of the Deutsche-Bank-Concern.

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars. How you do this depends on your functional currency. Your functional currency generally is the U.S. dollar unless you are required to use the currency of a foreign country.

You must make all federal income tax determinations in your functional currency. The U.S. dollar is the functional currency for all taxpayers except some qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records.

Even if you have a QBU, your functional currency is the dollar if any of the following apply.

*
You conduct the business in dollars.
*
The principal place of business is located in the United States.
*
You choose to or are required to use the dollar as your functional currency.
*
The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted.

Make all income tax determinations in your functional currency. If your functional currency is the U.S. dollar, you must immediately translate into dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies.

If your functional currency is not the U.S. dollar, make all income tax determinations in your functional currency. At the end of the year, translate the results, such as income or loss, into U.S. dollars to report on your income tax return.