Bloomberg News

German Stocks Climb; Deutsche Telekom Advances, RWE Falls

May 10, 2012

German stocks advanced for a second day as Deutsche Telekom AG (DTE), the nation’s largest phone company, reported earnings that exceeded estimates, outweighing concern that Greece may be forced to leave the euro.

Deutsche Telekom advanced 3 percent for the biggest gain in four months. Solarworld AG (SWV) rallied 13 percent as profit also beat analysts’ projections. RWE AG (RWE) declined 1.5 percent after Germany’s second-biggest utility said earnings fell 20 percent as Chancellor Angela Merkel’s nuclear phase-out curbed power- generation earnings.

The DAX Index surged 0.7 percent to 6,518 at the close of trading in Frankfurt, erasing an earlier drop of as much as 0.5 percent. The gauge has gained 11 percent this year as U.S. economic data exceeded forecasts. The broader HDAX Index rose 0.6 percent today.

“Greece leaves investors in a limbo between selling, fearing the whole euro area will go down the drain, or buying, believing there’s still a global upturn,” said Henrik Drusebjerg, a strategist at Nordea Bank AB in Copenhagen, who helps oversee $230 billion. “The problem with Greece is that there’s no time-line, no hint as to when things will settle.”

Greece’s political turmoil entered a fourth day today, with coalition talks deadlocked, raising the possibility that another election will have to be held as early as next month.

Greek Talks

Evangelos Venizelos, the socialist Pasok leader and former finance minister, tried to form a government after receiving a three-day mandate from President Karolos Papoulias. Alexis Tsipras, the leader of the left-wing Syriza coalition, yesterday abandoned his attempt to forge a government, forcing Papoulias to turn to Pasok, which came third in the elections.

The 17-nation euro area is on the verge of losing one of its members, according to the Bloomberg Global Poll. Fifty-seven percent of the 1,253 investors, analysts and traders who are Bloomberg subscribers said at least one country will abandon the euro by year-end and 80 percent expected more pain for Europe’s bond markets.

Spain said it will take over Bankia SA and prepared to inject public funds into the banking group with the most Spanish real estate as part of efforts to bolster confidence in the country’s lenders. Spain’s bank bailout fund will convert its 4.5 billion euros ($5.8 billion) of preferred shares in Bankia’s parent company Banco Financiero & de Ahorros, or BFA, into voting shares, the Economy Ministry said.

China, U.S. Economies

In China, exports and imports rose less than economists had estimated in April, adding pressure on the government to ease policies to spur expansion. Overseas shipments rose 4.9 percent from a year earlier, the customs bureau said today. That compared with the 8.5 percent median estimate in a Bloomberg survey of 33 analysts. Import growth of 0.3 percent trailed forecasts for a 10.9 percent gain.

A U.S. report showed that initial jobless-benefit claims fell last week to a one-month low. Claims dropped by 1,000 to 367,000 in the period ended May 5, in line with the median forecast in a Bloomberg survey of economists.

Deutsche Telekom climbed 3 percent to 8.80 euros. Europe’s second-largest telephone company said first-quarter earnings before interest, taxes, depreciation and amortization excluding some items slipped 0.1 percent to 4.48 billion euros ($5.8 billion). The average estimate of 21 analysts surveyed by Bloomberg had called for 4.4 billion euros of profit.

T-Mobile Merger

Separately, the company was said to discuss a merger of its T-Mobile USA Inc. unit with MetroPCS Communications Inc. Deutsche Telekom has considered a stock-swap transaction that would give it control over the combined entity, which would be publicly listed, said two of the people, who declined to be identified because the talks are private.

Other options include an initial public offering or an outright sale of T-Mobile USA, the people said, adding that Deutsche Telekom has held talks with other companies.

Solarworld, the biggest German maker of solar panels, rose 13 percent to 1.86 euros, the biggest gain since November. First-quarter earnings before interest and taxes of 31.5 million euros exceeded analysts forecasts.

Wincor Nixdorf AG (WIN) surged 8.2 percent to 31.12 euros as Berenberg Bank upgraded the German maker of banking machines and cash registers to buy from hold.

RWE declined 1.5 percent to 31.68 euros. The utility said first-quarter recurrent net income, the measure used to calculate the dividend, fell to 1.29 billion euros from 1.61 billion euros a year earlier. That compares with the 1.33 billion-euro average estimate of 14 analysts surveyed by Bloomberg.

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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