Bloomberg News

German Stocks Climb as Italy’s Borrowing Costs Ease at Bond Sale

December 29, 2011

Dec. 29 (Bloomberg) -- German stocks rose for the fourth time in five days after Italy’s borrowing costs fell at a debt auction and U.S. business activity expanded more than forecast.

Bayer AG rose 2.9 percent. PNE Wind AG climbed 7.9 percent after selling its Gode II offshore wind farm.

The DAX Index increased 1.3 percent to 5,848.78 at the close in Frankfurt. The gauge has still lost 15 percent this year amid concern the growing debt crisis in the euro area will damp the global economy. The broader HDAX Index added 1.3 percent today.

Italy’s borrowing costs fell as it sold 7 billion euros ($9 billion) of bonds in the final debt sale of the year.

The government sold 2.5 billion euros of bonds due in 2014, less than the 3 billion euro maximum target, to yield 5.62 percent, down from 7.89 percent at the previous sale on Nov. 29. The Treasury priced 2.5 billion euros of its 5 percent 2022 bond to yield 6.98 percent, compared with 7.56 percent on Nov. 29. Italy also sold about 2 billion euros of bonds due 2021 and a floating-rate security due 2018.

The sale came one day after Italy auctioned 9 billion euros in treasury bills for 3.251 percent, about half the rate from the previous auction.

The Institute for Supply Management-Chicago Inc. said its business barometer decreased to 62.5 this month from 62.6 in November. Readings above 50 signal growth. Economists forecast the gauge would fall to 61, according to the median of 49 estimates in a Bloomberg survey.

U.S. Unemployment

A U.S. Labor Department report showed that first applications for unemployment benefits increased to 381,000 last week, after falling to the lowest since April 2008 in the previous period. The median forecast of 32 economists surveyed by Bloomberg News had called for 375,000 claims.

The four-week moving average for claims, a less volatile measure than weekly figures, dropped to 375,000 last week, the lowest level since June 2008.

Shares fell yesterday as the European Central Bank’s balance sheet soared to a record after it lent financial institutions more money last week in an attempt to keep credit flowing to the economy during the debt crisis.

Bayer rose 2.9 percent to 48.73 euros after it applied to the Food and Drug Administration for expanding the medicinal uses of Xarelto, a drug that prevents blood clots.

Aixtron, which makes equipment fort the semiconductor and lighting-technology industries rose 2.5 percent to 9.65 euros. SGL Carbon, a maker of carbon products, increased 2.6 percent to 38.20 euros.

PNE Wind jumped 7.9 percent to 1.89 euros, its biggest gain in three months. The German wind-energy company sold its Gode Wind II offshore wind farm to Brancor Capital Partners.

--Editors: Andrew Rummer, Srinivasan Sivabalan

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

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


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