German Stocks Drop as Williams Says Bond Buying May Slow

German stocks declined, snapping an eight-day winning streak, as a Federal Reserve policy maker said the central bank may reduce its monthly bond purchases as early as this summer.

Suedzucker AG (SZU) dropped to an eight-month low as J&E Davy Holdings Ltd. downgraded the shares. Volkswagen, Europe's biggest automaker, gained 1.3 percent as data showed European car sales increased for the first time in 19 months in April.

The benchmark DAX Index (DAX) fell 0.4 percent to 8,334.58 at 10:31 a.m. in Frankfurt, paring its weekly gain to 0.7 percent. The gauge has rallied 9.5 percent this year as central banks around the world maintained monetary stimulus. The broader HDAX Index also retreated 0.4 percent today.

"The end of this week could be affected by some profit taking," Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in a note to clients. "Regarding the gains we saw during the recent past, this would be no surprise. Weaker trading in the European market today would fit the overall pattern, where there is still some investor mistrust about the reasonableness of the rally."

In the U.S., Fed Bank of San Francisco President John Williams said quickening economic growth and an improving job market may prompt the central bank to begin to reduce its $85 billion of monthly bond purchases in the next few months.

Williams was one of the first Fed officials to advocate the purchase of bonds without setting a time or total limit. He doesn't vote on policy this year.

Stress Tests

The European Banking Authority delayed stress tests for lenders that it had planned to undertake this year, allowing the European Central Bank to hold its own review of the institutions' asset quality. The London-based EBA, which was set up in 2011 to harmonize rules across the European Union, postponed its tests until 2014.

Suedzucker, which makes sugar, starch and bakery additives, dropped 5.3 percent to 25.88 euros. Davy downgraded the shares to neutral from outperform, citing the company's lower-than-expected earnings guidance for the fiscal year.

Deutsche Telekom AG (DTE) slid 1.8 percent to 9.17 euros. Europe's second-largest telephone company traded without the right to a dividend today.

UBS AG cut its recommendation on global telecom stocks to underweight, which is similar to a sell rating. A gauge of phone stocks fell the second-most among the 19 industry groups in the Stoxx Europe 600 Index.

Volkswagen, Europe's biggest automaker, gained 1.3 percent to 164.45 euros. Daimler AG, the third-biggest luxury-vehicle maker rose 1.1 percent to 47.72 euros. Continental AG (CON), Europe's second-largest auto-parts maker, added 1.2 percent to 98.51 euros. A measure of carmakers posted the best performance on the Stoxx 600.

European car sales advanced in April on gains in the U.K. and a rebound in Germany. Registrations increased 1.8 percent to 1.08 million vehicles from 1.06 million cars a year earlier, the Brussels-based European Automobile Manufacturers' Association, or ACEA, said.