Bloomberg News

German Stocks Advance on Optimism Europe Will End Debt Crisis

October 28, 2011

Oct. 28 (Bloomberg) -- German stocks advanced, with the benchmark DAX Index poised for the biggest weekly gain in a month, on optimism that the Brussels agreement among European leaders will help end the debt crisis.

Deutsche Bank AG and Commerzbank AG, Germany’s largest lenders, paced gains. Linde AG increased 2.1 percent after the world’s second-biggest maker of industrial gases reported third- quarter earnings that beat analyst estimates.

The benchmark DAX Index gained 75.09, or 1.2 percent, to 6,412.93 at 10:09 a.m. in Frankfurt, extending yesterday’s 5.4 percent rally. The measure yesterday entered a bull market, commonly defined as an increase of 20 percent. The DAX has risen 27 percent from this year’s low on Sept. 12 and is headed for a weekly gain of 7.5 percent, the most in a month. The broader HDAX rallied 1.2 percent today.

Euro-area leaders persuaded bondholders to take 50 percent losses on Greek debt and decided to boost the European Financial Stability Facility, the region’s rescue fund, to 1 trillion euros ($1.4 trillion), responding to global pressure to step up the fight against the sovereign debt crisis.

“In the short term, the decision reached is just enough to get the job done, but we do need more details about the deal itself,” said Kevin Gardiner, head of global investment strategy at Barclays Wealth in London. “Early indications suggest that markets are agreeing with the conclusion. The agreement strengthens our underlying view; that a ‘muddle- through’ scenario is the most likely outcome for the euro zone area and the global economy itself.”

Banks Advance

Deutsche Bank gained 2.5 percent to 33.61 euros, after a 15 percent gain yesterday that was its largest increase since March 2009. Commerzbank rose 1.8 percent to 2.07 euros, after surging 16 percent yesterday. Deutsche Boerse AG, operator of the Frankfurt exchange, increased 2.6 percent to 42.62 euros.

Volkswagen AG, Europe’s largest automaker, advanced 2.6 percent to 133.95 euros. Renault SA jumped 6.3 percent to 32.21 euros after France’s second-biggest carmaker reported third- quarter sales that beat analysts’ estimates.

Linde rose 2.1 percent to 118.45 euros. The company reported third-quarter earnings before interest, taxes, depreciation and amortization of 804 million euros ($1.14 billion), beating the median analyst estimate of 796.4 million euros in a Bloomberg survey, helped by cost saving and higher demand in emerging markets.

Wacker Chemie slipped 1.2 percent to 83.30 euros. The Munich-based chemicals company reported third-quarter earnings and sales that trailed analysts’ estimates and said it sees “substantially” lower sales and revenue in the fourth quarter.

--Editors: Srinivasan Sivabalan, James Kraus

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

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


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