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Daimler Cuts Earnings Outlook, Shares Plunge

Daimler cut its 2008 earnings outlook on Thursday, saying it would not be able to offset a global growth slowdown, rising raw material prices and the strong euro by selling more vehicles and cutting costs.

"On the basis of the divisions' projections, the Daimler Group expects to post EBIT from ongoing operations of more than 7 billion euros ($11 billion) in 2008," it said in a statement which knocked its shares sharply lower.

It had previously targeted earnings before interest and tax from ongoing operations of significantly above the 7.7 billion euros it made in 2007.

The negative impact of its remaining 19.9 percent stake in ailing U.S. carmaker Chrysler are not included in the forecast.

The Chrysler stake lopped 373 million euros from second-quarter EBIT.

Second-quarter group earnings before interest and tax (EBIT) fell a less-than-expected 4 percent to 2.05 billion euros.

The market had expected EBIT of 1.992 billion, according to a Reuters poll of 18 analysts.

Daimler shares fell, the leading decliners among German blue chips and the DJ Stoxx European car sector index, as the carmaker and world's top truck maker reversed this week's trend by European peers to confirm their full-year outlooks.