Bloomberg News

German Stocks Surge Before Greek Confidence Vote; Metro Gains

June 21, 2011

June 21 (Bloomberg) -- German stocks posted the biggest rally in two months as investors speculated that Greek Prime Minister George Papandreou will win a confidence vote in his government today.

Metro AG rose 1.7 percent as Nomura Holdings Inc. recommended buying the shares of Germany’s biggest retailer. Software AG jumped 4.5 percent as UBS AG upgraded its rating on the stock. ThyssenKrupp AG advanced with metal prices.

The benchmark DAX Index climbed 1.9 percent to 7,285.51 at the 5:30 p.m. close in Frankfurt, the largest rally since April 20. The gauge has still fallen 3.2 percent from this year’s high on May 2 on speculation that the U.S. economic recovery is slowing and that Greece will fail to repay all of its debt. The broader HDAX Index also gained 1.9 percent today.

“The market is waiting for a solution to the Greek issue and whatever the solution is, it will have a positive impact,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt.

Tonight’s confidence vote may determine whether Greece becomes the first euro-area country to default and caps a week of turmoil for Papandreou in which the Greek prime minister has fended off a revolt from within his ruling Pasok party. European Union leaders have insisted that Papandreou secures multiparty support for austerity measures that are a condition of further financial aid.

Germany’s Finance Minister Wolfgang Schaeuble said that the European Union should connect further aid to Greece with reforms such as privatizations and structural changes to the labor market, Die Zeit reported, citing an interview.

Confidence Data

German stocks briefly pared their gains after a report showed that investor confidence in the country slid to a 2 1/2- year low. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, fell to minus 9 in June from 3.1 in May. Economists had forecast a drop to minus 3, according to the median of 37 estimates in a Bloomberg survey.

Metro climbed 1.7 percent to 43.42 euros, its third day of gains. Nomura raised its recommendation on the stock to “buy” from “neutral.”

Software AG surged 4.5 percent to 40.52 euros, its first advance in five days. UBS upgraded Germany’s second-biggest maker of business software to “buy” from “neutral.”

ThyssenKrupp, TUI

ThyssenKrupp, Germany’s biggest steelmaker, gained 2.9 percent to 35.26 euros as copper, lead, nickel, tin and zinc all rose on the London Metal Exchange.

TUI AG climbed 5.2 percent to 7.68 euros, its largest increase in more than 11 months. The tour operator that’s trying to sell its stake in the Hapag-Lloyd AG shipping company was raised to “buy” from “neutral” at WestLB AG.

Pfleiderer AG jumped 27 percent to 52.2 euro cents, its biggest gain since 2002. The maker of laminate flooring said hybrid bondholders agreed to a restructuring plan under which they swap their claims for the right to acquire 4 percent of stock in the company. Shareholders need to approval the proposal at a meeting scheduled for July 21, the company said.

--Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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