Bloomberg News

German Stocks Advance After Business Confidence Climbs

March 26, 2012

German stocks gained for a second day after business confidence unexpectedly increased and Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed to boost employment.

Software AG (SOW) rose 2.3 percent after announcing full-year sales that matched analyst estimates and a dividend increase. Linde AG (LIN) climbed 2.8 percent as it offered concessions to regulators reviewing its takeover bid for a unit of Air Products & Chemicals Inc. PNE Wind AG (PNE3) fell 1.5 percent after stopping the sale of its Gode II wind farm.

The benchmark DAX Index climbed 1.2 percent to 7,079.23 at the close of trading in Frankfurt, having earlier lost as much as 0.4 percent. The gauge declined 2.3 percent last week as economic data from China to the U.S. and Europe raised concern the global economic recovery is faltering. The broader HDAX Index also rallied 1.2 percent today.

“On the one hand, excellent German figures are pointing towards stronger growth in Europe’s largest economy in the months ahead,” said Markus Huber, head of German sales trading at ETX Capital in London. “But on the other hand, it seems to be the case that the European financial crisis still has some bite left. Not necessarily pushing markets substantially lower like in 2011 but still having the potential of holding the market somewhat back.”

The DAX has jumped 20 percent this year as Greece obtained a second bailout from the euro area and U.S. economic reports beat estimates.

Confidence Climbs

German business confidence unexpectedly rose to an eight- month high in March, suggesting Europe’s largest economy will return to growth even as the sovereign debt crisis curbs euro- area demand for its exports.

The Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, increased to 109.8 from a revised 109.7 in February. Economists had forecast it would remain unchanged at the initial February reading of 109.6, according to the median of 44 estimates in a Bloomberg News survey.

In the U.S., Bernanke said that, while he’s encouraged by the unemployment rate’s decline to 8.3 percent, continued accommodative monetary policy will be needed to make further progress.

A U.S. index of pending home purchases fell 0.5 percent to 96.5 in February after a 2 percent increase the prior month, the National Association of Realtors said today in Washington. January’s reading of 97 was the highest since April 2010. The median forecast of 41 economists surveyed by Bloomberg News called for a 1 percent gain.

Crisis Firewall

European finance ministers will meet in Copenhagen from March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on their debt-crisis bailout fund. German Chancellor Angela Merkel gave her first indication that she is prepared to allow an increase in the firewall today, saying that she could let the temporary and permanent rescue funds run in parallel.

Software AG (SOW) advanced 2.3 percent to 29.59 euros. Germany’s second-largest software maker reported 2011 revenue of 1.1 billion euros, matching analyst estimates, and announced a dividend of 46 cents per share, up from 43 cents in 2010.

Linde climbed 2.8 percent to 134.30 euros. The world’s second-biggest supplier of industrial gases offered concessions to European Union regulators in their review of its bid to buy a European business from Air Products & Chemicals. The EU extended until April 18 its deadline to rule on the deal, according to a filing on its website today.

Daimler Climbs

Daimler AG (DAI) rose 2.6 percent to 46.65 euros. BYD Co., the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., will this month announce the first brand of electric vehicles through its joint venture with Daimler.

Rheinmetall AG (RHM), the maker of KS Kolbenschmidt engine pistons and a partner in Germany’s Puma battle tank, added 3.8 percent to 45.27 euros as auto-industry shares were the second- biggest gainers among the 19 groups in the Stoxx Europe 600 Index. Continental AG (CON), Europe’s second-largest tiremaker, rose 2.4 percent to 71.70 euros.

Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, advanced 1.6 percent to 10.47 euros as travel companies gained.

EasyJet Plc, the region’s second-largest discount carrier, forecast a narrower six-month loss after business bookings helped offset rising fuel costs.

TAG Immobilien AG (TEG) gained 3.8 percent to 6.85 euros. The Hamburg-based realtor agreed to buy DKB Immobilien AG, a real- estate unit of Bayerische Landesbank, for 160 million euros in cash to increase its number of residential properties by more than 80 percent.

GEA Gains

GEA Group AG (G1A) advanced 2.4 percent to 25.80 euros after winning a contract worth more than 70 million euros to build a powdered milk plant in New Zealand.

Biofrontera AG (B8F), a German company specializing in skin treatments, surged 19 percent to 4.22 euros as Entrepreneur Carsten Maschmeyer purchased shares in a capital increase announced on March 23.

PNE Wind preferred shares fell 1.5 percent to 1.76 euros. The wind-energy company said the sale of its Gode Wind II offshore wind farm was stopped after payment wasn’t made.

Douglas Holding AG (DOU), Europe’s largest makeup and perfume retailer, fell 1.6 percent to 34.37 euros. The company’s shares were cut to sell from hold at Berenberg Bank.

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

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


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