Bloomberg News

German Stocks Advance for Third Day; K+S, Deutsche Boerse Gain

February 03, 2012

Feb. 2 (Bloomberg) -- German stocks gained for a third day, extending a six-month high, as a decline in claims for U.S. jobless benefits indicated the recovery in the world’s largest economy is on track.

K+S AG, Europe’s largest potash maker, paced gains. Linde AG advanced after Credit Suisse Group AG advised buying shares in the supplier of industrial gases. Deutsche Boerse AG surged 4 percent amid speculation the exchange operator may pay a special dividend following its failed takeover of NYSE Euronext. Deutsche Bank AG declined after profit slumped.

The DAX Index rose 0.6 percent to 6,655.63 at the close in Frankfurt, the highest since Aug. 2. The gauge has jumped 13 percent this year, advancing the most in January since the benchmark measure started in 1988, amid speculation the global economy will withstand the impact of the euro area’s debt crisis and as central banks acted to fuel growth. The HDAX Index also climbed 0.6 percent today.

“It looks like the market is pretty resilient and this rally can continue for a couple of weeks,” said Urs Eilinger, who helps oversee $3 billion as chief investment officer at Infidar Investment Advisory Ltd. in Zurich. “The U.S. economy will surprise positively.”

A Labor Department report showed claims for U.S. jobless benefits fell last week, a sign the labor market is improving. Applications for unemployment insurance payments dropped by 12,000 to 367,000 in the week ended Jan. 28, Labor Department figures showed today in Washington. The median forecast of 46 economists in a Bloomberg News survey projected 371,000.

Signs of Improvement

Federal Reserve Chairman Ben S. Bernanke said the economy has shown signs of improvement while remaining vulnerable to shocks, and he called on lawmakers to reduce the long-term U.S. budget deficit.

“Fortunately, over the past few months, indicators of spending, production, and job-market activity have shown some signs of improvement,” Bernanke said today, according to prepared testimony to the House Budget Committee in Washington. “The outlook remains uncertain, however, and close monitoring of economic developments will remain necessary.”

K+S climbed 3.2 percent to 38.86 euros.

Linde, the world’s second-biggest supplier of industrial gases, rose 0.9 percent to 123.40 euros. Credit Suisse rated the shares “outperform” in new coverage, citing the company’s market share in Asia and its share-price discount to peers.

Deutsche Boerse Rallies

Deutsche Boerse gained 4 percent to 47.31 euros. Analysts at WestLB AG wrote in a report that the operator of the Frankfurt Stock Exchange may pay a special dividend of 2 euros a share or resume buybacks after the European Commission yesterday blocked the company from acquiring NYSE Euronext. Bank of America Corp. recommended buying the shares.

“Given Deutsche Boerse’s business mix towards what we view as higher growth areas such as derivatives and post-trade services coupled with limited exposure to competitive pressures in cash equities, we continue to view the standalone valuation as undemanding,” the brokerage wrote in a report today.

Deutsche Bank dropped 0.4 percent to 33.90 euros, after yesterday gaining 5.1 percent. Germany’s biggest lender said profit slumped 76 percent in the fourth quarter as the sovereign-debt crisis sapped trading.

Net income fell to 147 million euros ($193 million) from 601 million euros a year earlier, the Frankfurt-based company said. That missed the 556 million-euro average estimate of 12 analysts surveyed by Bloomberg. The investment bank had a 422 million-euro pretax loss.

--Editors: Andrew Rummer, Will Hadfield

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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