Bloomberg News

German Stocks Rise for Fifth Day; Commerzbank Advances

March 13, 2012

German (SXXP) stocks rose for a fifth day as investor confidence climbed more than forecast in March and American retail sales rose in February.

Deutsche Bank AG (DBK) and Commerzbank AG (CBK), the biggest German (SXXP) lenders, added 3.5 percent and 5.1 percent, respectively, as financial stocks climbed in Frankfurt. Munich Re, the world’s biggest reinsurer, gained 2.6 percent after saying it plans to triple profit this year on higher investment income. SAP AG (SAP), the biggest maker of business software applications, rose 1.5 percent after Sanford Bernstein raised its rating on the stock.

The DAX Index (DAX) advanced 94.56, or 1.4 percent, to 6,995.91 at the close in Frankfurt, extending the longest streak of daily gains since October. The broader HDAX Index added 1.4 percent today. The DAX has rallied 19 percent so far this year as the European Central Bank lent regional financial institutions more than 1 trillion euros ($1.3 trillion) for three years and U.S. economic reports topped estimates.

“With the situation in Greece under control, investors will focus more on key indicators,” Jakup Petur Baerentsen, a chief equity adviser at Nordea Private Bank in Copenhagen, said in a note to clients.

German Confidence

German investor confidence rose more than economists forecast in March after the European Central Bank flooded financial markets with cash and the sovereign debt crisis showed signs of abating.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, advanced to 22.3 from 5.4 in February. That’s the fourth straight increase. Economists forecast a gain to 10, according to the median of 36 estimates in a Bloomberg News survey.

Retail sales in the U.S. rose in February by the most in five months, reflecting broad-based gains that indicate the world’s largest economy is picking up even as gasoline costs climb.

The 1.1 percent advance matched the median forecast of 81 economists surveyed by Bloomberg News and followed a 0.6 percent increase in January that was larger than previously estimated, Commerce Department figures showed today in Washington. Demand improved in 11 of 13 categories, including auto dealers and clothing stores.

Fed Meeting

The Federal Reserve will announce its rate decision at 2:15 p.m. in Washington. Policy makers will probably refrain from further action to boost economic growth as they assess recent data, estimates show.

In a testimony before Congress on Feb. 29, Fed Chairman Ben Bernanke said maintaining monetary stimulus is warranted even as the unemployment rate falls. The Wall Street Journal last week reported the U.S. central bank is considering a strategy that would allow it to undertake another round of bond buying, while lowering the risk of inflation.

Euro-area finance ministers cleared a second rescue of Greece, paving the way for the first payment from the 130 billion-euro package to be made this month. Officials will give a formal approval on March 14, a day before the International Monetary Fund board votes on its contribution.

The agreement concludes months of negotiations between Greece, the IMF and euro-area authorities over the successor to the 2010 bailout that failed to halt the debt crisis. Greece had to agree to deep budget cuts and complete the world’s largest- ever sovereign-debt restructuring to obtain the aid.

Banks Gain

Deutsche Bank rose 3.5 percent to 36.9 euros, while Commerzbank gained 5.1 percent to 1.89 euros. Aareal Bank AG (ARL) climbed 3.7 percent to 15.94 euros. Banks advanced the most of any of the 19 industry groups in the Stoxx Europe 600 pan- European benchmark index.

Munich Re rose 2.6 percent to 111.55 euros. The reinsurer aims to more than triple profit to about 2.5 billion euros this year as investment income increases.

An expected return of about 3.5 percent will generate investment income of about 7.2 billion euros compared with 6.8 billion euros in 2011, when the result was affected by “high writedowns on Greek securities,” the reinsurer said in an e- mailed statement today.

The Greek debt swap “will at most lead to relatively low expenses in 2012,” Munich Re said, after Greece last week said it will achieve a 95.7 percent participation rate as it cuts 20 billion euros of privately held debt by more than 50 percent.

Q-Cells SE (QCE) declined 9.2 percent to 26.6 euro cents. The German maker of solar cells gained 27 percent yesterday after saying it won contracts for four Greek solar projects.

SAP rose 1.5 percent to 53.48 euros. The software developer was raised to outperform from market perform at Sanford Bernstein, which sees SAP’s HANA product accelerating company growth, and has a target price of 66 euros per share.

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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