Bloomberg News

German Stocks Advance as ThyssenKrupp, Banks Rally; EON Drops

January 23, 2012

Jan. 23 (Bloomberg) -- German stocks advanced to a five- month high as gains in banks and ThyssenKrupp AG outweighed a retreat in utilities.

ThyssenKrupp gained 2.9 percent as Germany’s largest steelmaker discussed merging its Inoxum stainless unit with Outokumpu Oyj. EON AG and RWE AG, Germany’s biggest utility companies, declined more than 1 percent.

The DAX Index rallied 0.7 percent to 6,448.02 at 12:23 p.m. in Frankfurt, the highest since Aug. 4. The gauge soared 4.3 percent last week as Spain and France sold bonds at lower yields and a report showed that fewer Americans than predicted filed claims for jobless benefits. The broader HDAX Index also rose 0.7 percent today.

Bondholders negotiating the Greek debt swap said they made their “maximum” offer, leaving it to the European Union and International Monetary Fund to decide whether to accept the deal, said Charles Dallara, who’s representing private creditors in the talks.

Dallara, managing director of Institute of International Finance, said he’s hopeful the EU an IMF will agree to terms for private investor involvement in a rescue of Greece to avert a default and collapse of the economy. He declined to elaborate on the terms discussed in talks that resumed Jan. 18 and remained inconclusive as EU finance ministers prepared to meet today.

Stock Valuations

European equity valuations have fallen to the lowest levels since 2004 compared with the U.S., as economic forecasts between the two regions diverge by the most since 1998. The Stoxx 600 trades at 1.43 times book value, or assets minus liabilities, after falling 11 percent last year. The S&P 500 Index trades at 2.14, according to data compiled by Bloomberg.

ThyssenKrupp, Germany’s biggest steelmaker, climbed 2.9 percent to 21.31 euros. Options for the Inoxum unit include an initial public offering, spinoff or sale to an investor, Essen- based ThyssenKrupp said.

Deutsche Bank AG and Commerzbank AG gained 3.8 percent to 33.75 euros and 7.6 percent to 1.85 euros, respectively. Banking shares were the best performing industry in the benchmark Stoxx Europe 600 Index today.

EON declined 1.2 percent to 16.04 euros and RWE slid 2.2 percent to 26.36 euros. Bayer AG, Germany’s largest drugmaker, slipped 0.7 percent to 53.16 euros.

--Editor: 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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