Bloomberg News

German Shares Rise as Spain Sells More Than Bill Target

April 17, 2012

German stocks rose the most in three months as Spain sold more than the top target at a debt auction, German investor confidence unexpectedly advanced, and the International Monetary Fund boosted its global outlook.

Deutsche Bank AG (DBK) and Commerzbank AG were among the main gainers. Sky Deutschland AG (SKYD) rose as the German pay-TV company controlled by News Corp. won the broadcast rights to Bundesliga games. Wincor Nixdorf AG (WIN) fell after warning of a drop in full- year profit.

The DAX Index (DAX) climbed 2.7 percent, the most since Jan. 2, to 6,801 at the close in Frankfurt. The benchmark gauge has gained 15 percent so far this year as the European Central Bank flooded financial markets with 1 trillion euros ($1.3 trillion) of three-year loans to ease credit and as U.S. economic reports exceeded estimates. The broader HDAX Index added 2.5 percent today.

“The ZEW Index came in rather strong, giving no indication at all that the German economy recovery is about to experience a slowdown or even stagnation; instead it seems that the recovery is gaining a firmer footing as 2012 progresses,” Markus Huber, head of German sales trading at ETX Capital in London, wrote in e-mailed comments.

“The real test of investor confidence into Spain’s ability to rein in their deficit and service their debt is about to take place on Thursday when two bond auctions are scheduled.”

Spanish Auction

Spain sold 3.18 billion euros of bills, compared with a maximum target of 3 billion euros the Treasury set for the sale.

The average 12-month yield was 2.623 percent, compared with 1.418 percent at the last auction on March 20, the Bank of Spain said in Madrid today. The Treasury also sold 18-month bills at 3.11 percent, compared with 1.711 percent last month. Demand for the 12-month bills was 2.9 times the amount sold, compared with 2.14 times last month. The bid-to-cover for the longer maturity notes was 3.77, compared with 2.93 on March 20.

German investor confidence unexpectedly climbed for a fifth month in April to the highest in almost two years, suggesting Europe’s largest economy can weather the resurgent debt crisis in the euro-region’s periphery.

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, rose to 23.4 from 22.3 in March. That’s the highest since June 2010. Economists forecast a drop to 19, according to the median of 39 estimates in a Bloomberg News survey.

IMF Outlook

The world economy will expand 3.5 percent this year and 4.1 percent in 2013, the Washington-based IMF said today in its World Economic Outlook, raising forecasts made in January from 3.3 percent for 2012 and 4 percent for next year.

In the U.S., housing starts in March dropped 5.8 percent to a 654,000 annual rate, less than the lowest estimate of economists surveyed by Bloomberg News and the least since October, Commerce Department figures showed today in Washington. The slump was led by the volatile multifamily category, which at the same time showed a jump in permits, a proxy for future construction.

In China, foreign direct investment fell 6.1 percent in March from a year earlier to $11.76 billion, the Ministry of Commerce said today in Beijing.

Deutsche Bank AG and Commerzbank AG (CBK), Germany’s two largest banks, rose 4.5 percent to 35.37 euros, and 5.8 percent to 1.68 euros, respectively. Financial stocks led gains among the 19 industry groups on the Stoxx 600 Europe Index.

Sky Deutschland

Sky Deutschland advanced 7 percent to 2.15 euros, after earlier rising as much as 27 percent. The broadcaster retained the rights to show live pay-TV soccer matches via cable and satellite, as well as new rights to show them on the Web, mobile devices and via Internet Protocol TV, Germany’s DFL league association said today. The sale will raise the annual income from the German rights to an average 628 million euros from 2013 to 2017, an increase of 52 percent.

HeidelbergCement AG (HEI), the world’s third-largest cement maker, added 3.6 percent to 44.09 euros as construction shares advanced. Hochtief AG (HOT), Germany’s largest construction company, rose 3.9 percent to 45.70 euros.

BASF AG, the world’s largest chemical maker, climbed 4.3 percent to 65.57 euros.

Daimler AG rose 3.9 percent to 42.45 euros. The carmaker is “not interested” in purchasing Ducati Motor Holding SpA from Investindustrial SpA, spokesman Florian Martens said in an e- mail today. Daimler may possibly bid for the maker of luxury motorcycles, Italian newspaper MF reported today.

Wincor Nixdorf fell 10 percent to 30.36 euros, its third day of declines. The maker of banking machines and cash registers said late yesterday that it sees a “significant” reduction in full-year operating profit, citing a “continued and substantial” decline in banking sales and pressure on margins in hardware.

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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