Bloomberg News

German Stocks Gain as Business Confidence Gauge Beats Estimates

December 20, 2011

Dec. 20 (Bloomberg) -- German stocks climbed the most this month after a measure of the country’s business confidence unexpectedly increased and U.S. housing starts topped economists’ estimates.

Bayerische Motoren Werke AG, Continental AG, HeidelbergCement AG and Metro AG led gains. Bayer AG added 5 percent after saying four of its drugs in development may become blockbusters. Deutsche Telekom AG declined after a deal to sell its T-Mobile USA unit to AT&T Inc. collapsed.

The DAX Index gained 3.1 percent to 5,847.03 at the close in Frankfurt, after earlier falling 0.6 percent. That’s the biggest gain since Nov. 30, and trims this year’s retreat to 15 percent. The broader HDAX Index also added 3.1 percent today.

A German business confidence index, based on a survey of 7,000 executives, rose to 107.2 this month from 106.6 in November, the Munich-based Ifo institute said today. Economists had predicted a drop to 106, the median forecast of 36 economists in a Bloomberg News survey showed.

“The Ifo index was definitely quite a positive surprise,” said Markus Huber, head of German sales trading at ETX Capital in London. “The German economy doesn’t seem to have seen such a negative impact from the financial crisis as many would have thought just a couple of months ago.”

U.S. Economy

U.S. builders broke ground in November on the most houses in more than a year, a sign that the market is stabilizing heading into 2012, Commerce Department figures showed. Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the U.S. economy will grow at least 2 percent next year.

In the U.K., consumer confidence rose in November from a record low as Britons’ expectations for the economy improved in the run-up to Christmas, Nationwide Building Society said.

Shares fell yesterday as European Central Bank President Mario Draghi said substantial risks to the economy remain and the law forbids him from increasing government-bond purchases to fight the debt crisis.

BMW, the world’s biggest maker of luxury cars, rose 4.3 percent to 52.22 euros and Continental, Europe’s second-largest car-parts maker, gained 6.4 percent to 49.39 euros.

Metro, Germany’s biggest retailer, rose 3.9 percent to 29.33 euros. HeidelbergCement increased 5.9 percent to 31.52 euros.

Daimler AG added 5.9 percent to 33.19 euros, the largest gain this month. The automaker is seeking an investor to take a stake of as much as 10 percent and is in talks with China Investment Corp., Manager Magazine reported. HeidelbergCement, the world’s third-largest maker of cement, added 5.9 percent to 31.52 euros. Kloeckner & Co SE, a steel and metal products distributor added 6.5 percent to 9.35 euros.

Bayer Blockbusters

Bayer rose 5 percent to 46.99 euros after saying four of its drugs may become blockbusters, ultimately contributing 5 billion euros ($6.5 billion) to annual revenue.

Blood-thinner Xarelto has the brightest prospects, with peak sales probably exceeding 2 billion euros a year, Leverkusen, Germany-based Bayer said today. Bayer’s eye drug VEGF Trap-Eye and cancer medicines Alpharadin and regorafenib have billion euro potential, the drugmaker said.

Air Berlin Plc jumped 7 percent to 2.68 euros after the carrier was raised to “hold” from “sell” at Royal Bank of Scotland Group Plc.

Deutsche Telekom lost 0.6 percent to 8.84 euros. AT&T Inc.’s $39 billion bid to acquire the company’s T-Mobile USA division came to an end yesterday in a phone call between the companies’ chief executive officers, according to people familiar with the matter.

--Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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


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