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