Bloomberg News

German Stocks Climb on U.S. Manufacturing Report; Carmakers Gain

January 03, 2012

Jan. 3 (Bloomberg) -- German stocks rose to a two-month high as the country’s unemployment rate unexpectedly fell and as a report showed U.S. manufacturing grew in December more than economists had forecast.

Volkswagen AG and Daimler AG rallied after R.L. Polk & Co. said global sales of cars and light trucks will grow 6.7 percent this year. Bayer AG rose 1.6 percent after Deutsche Bank AG made it one of its top picks among European drugmakers.

The DAX Index advanced 1.5 percent to 6,166.57 in Frankfurt, the highest since Oct. 28. The gauge increased for a fourth day, its longest winning streak since November. The DAX fell 15 percent last year as euro-area leaders struggled to contain the region’s debt crisis, though better-than-estimated U.S. economic reports helped trim that loss. The broader HDAX Index also added 1.5 percent today.

If politicians “can hold the situation stable, there is an opportunity for a better year for equities,” said Philipp Musil, who helps manage about $10 billion at Semper Constantia Privatbank AG in Vienna. “If the sovereign-debt crisis pops up again, it can be another difficult year. We hope that political leaders can fix it.”

The number of unemployed people fell more than forecast in December as exports of cars and machinery boomed and one of the mildest winters on record helped support jobs in construction.

The number of people out of work fell a seasonally adjusted 22,000 to 2.89 million, the Nuremberg-based Federal Labor Agency said. Economists had forecast a decline of 10,000 in a Bloomberg News survey. The adjusted jobless rate dropped to 6.8 percent, compared with an average estimate of 6.9 percent.

U.S. Manufacturing

In the U.S., the Institute for Supply Management’s factory index rose to 53.9 in December from 52.7 in November, the Tempe, Arizona-based group said today. Economists surveyed by Bloomberg News had projected an increase to 53.5. Fifty is the dividing line between growth and contraction.

National leaders have pledged to draft a stricter rulebook for controlling government spending. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in Berlin on Jan. 9 to work out the details.

France sold 84-, 161- and 315-day treasury bills today. The 10-year yield increased four basis points to 3.28 percent as of 2:05 p.m. London time, rising for a fifth consecutive day. Two- year yields added two basis points to 0.87 percent.

Carmakers Advance

Volkswagen, Europe’s largest carmaker, climbed 2.6 percent to 122.85 euros. Daimler added 3.7 percent to 36.67 euros.

Auto sales will rise to 77.7 million vehicles this year, helped by a 16 percent gain in China to 17.9 million, according to Polk, a research company based in Southfield, Michigan. China sales were unchanged at 15.5 million in 2011, Polk estimated, after the government phased out purchase incentives.

Separately, Volkswagen’s Bentley super-luxury brand sold 37 percent more cars last year as demand for the U.K. unit’s models doubled in China, helping make the division profitable in 2011, Bentley said today.

Bayerische Motoren Werke AG increased 4 percent to 55.29 euros as Sueddeutsche Zeitung said the world’s biggest maker of luxury cars expects the automotive market to remain stable in 2012, with growth opportunities in the U.S. and China.

Bayer rose 1.6 percent to 51.62 euros after Deutsche Bank included the stock as a top European pharmaceutical pick for this year. Bayer has the “most new-product leverage” among large-cap companies, Deutsche Bank analyst Tim Race wrote in a note.

Nordex SE jumped 6.7 percent to 4.30 euros. The wind- turbine maker said it won an order from Ireland’s state-owned utility Bord Gais Eireann for 17 turbines.

K+S AG rallied 4.4 percent to 37.30 euros. Europe’s largest potash maker expanded its salt operation in eastern Europe with the acquisition of Solne Mlyny AS of the Czech Republic for a mid-single-digit million euro sum.

Sky Deutschland AG soared 14 percent to 1.64 euros, the most in a year. The stock was raised to “buy” from “hold” at RBS.

--Editors: Srinivasan Sivabalan, Will Hadfield

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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