Bloomberg News

German Stocks Advance on Consumer Confidence Reports

May 25, 2012

German stocks advanced as reports showed consumer confidence is recovering in Europe and the U.S. and as Italian Prime Minister Mario Monti said most European Union leaders support collective debt sales.

EON AG and RWE AG (RWE) climbed at least 1.5 percent after Financial Times Deutschland reported that the nation’s biggest utilities are in talks with the Chinese to sell their U.K. nuclear power project. Siemens AG (SIE) advanced after Deutsche Bank AG advised investors to buy the stock.

The DAX rose 0.4 percent to 6,339.94 at the close in Frankfurt. The benchmark gauge increased 1.1 percent this week, bringing the 2012 rally to 7.5 percent, amid speculation that China and the euro area will take measures to boost economic growth. The broader HDAX Index added 0.3 percent today.

“Comments from Monti on euro bonds were helpful, but it is easier said than done to persuade Germany,” said Kenneth Wattret, chief euro-zone economist at BNP Paribas SA in London. “The Chinese authorities seem more willing to stimulate the economy, which is good for global trade and German exports.”

GfK SE’s German consumer-sentiment index will remain at 5.7 next month, the Nuremberg-based market research company said today. Economists predicted the indicator would stay at May’s initial reading of 5.6, the median of 26 estimates in a Bloomberg News survey shows.

A separate report showed consumer confidence in France increased in May to the highest since November 2010.

U.S. Economy

U.S. consumer sentiment rose in May to the highest level since October 2007 as prices at the gas pump became less of a drag on household budgets.

The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 79.3 from 76.4 the prior month. The gauge was projected to hold at the preliminary reading of 77.8, according to the median forecast of economists surveyed by Bloomberg News.

Most European Union leaders at a Brussels meeting this week backed joint euro-area bonds, Monti said. Italy can help push Germany to embrace the “common good” of Europe, he said.

EON and RWE rallied 1.5 percent to 15.54 euros and 1.6 percent to 30.45 euros, respectively. Financial Times Deutschland reported that the two utilities are in talks with the Chinese to sell their joint nuclear project in the U.K.

The companies dropped plans for a nuclear plant in the U.K. in March, saying they couldn’t justify the capital spending. The venture has sites in Wales and the west of England and had planned to start building the first reactor by 2015.

Siemens, Germany’s biggest engineering company, rose 2.3 percent to 68.58 euros after it was upgraded to buy from hold by Deutsche Bank.

Deutsche Telekom AG (DTE) was the biggest drag on the DAX (DAX) Index today, as the shares traded without the right to the latest dividend. The shares lost 8 percent to 8.16 euros, when not adjusted for the lost rights. Accounting for the change, the shares lost 0.2 percent.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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


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