Bloomberg News

German Stocks Advance; BMW, Daimler, ThyssenKrupp Gain

June 18, 2012

German stocks rose to a two-week high as gains by pro-bailout parties in Greece’s election calmed speculation that the country will be forced out of the euro.

Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury vehicles, and Daimler AG (DAI) each increased 2.1 percent. ThyssenKrupp AG (TKA), Germany’s largest steelmaker, climbed 1.8 percent after a slab-making mill in Brazil attracted interest from a local rival. Rheinmetall AG (RHM) surged 6.7 percent as Bild am Sonntag said Saudi Arabia will order 800 battle tanks.

The DAX Index increased 0.3 percent to 6,248.2 at the close of trading in Frankfurt, the highest since May 31. The benchmark gauge has still fallen 13 percent from its 2012 high on March 16 amid growing concern that the deepening euro-region debt crisis is harming the area’s economy. The broader HDAX Index added 0.3 percent today.

“This is the best realistic outcome because there is a government which is able to negotiate and represent Greece,” said Alberto Gallo, head of European Macro Credit Research at Royal Bank of Scotland in London. “The fundamental economic problems in Greece remain, with heavy austerity measures needed for the country to be sustainable. The risk of an escalation of capital and deposit flight out of Greek banks is lower.”

Elections in Greece yesterday saw the New Democracy and Pasok parties win enough seats to form a majority in the 300- member parliament, easing concern that the nation will reject austerity measures needed to qualify for international aid.

Greek Vote

The vote forced Greeks, in a fifth year of recession, to choose open-ended austerity to stay in the euro or reject the terms of a bailout and risk the turmoil of exiting the 17-nation currency. European governments indicated a willingness to relent on Greece’s austerity measures. The new government must emerge “swiftly” from the contest, euro finance ministers said in a statement on June 17.

Fitch Ratings said the victory of New Democracy in Greece removed the immediate risk of the ratings company cutting the credit grades of euro-area countries.

“Fitch will not place all euro-zone sovereigns on rating watch negative as it had indicated would be the case if a Greek euro exit were a probable near-term event,” Fitch said in a statement today.

German stocks advanced even as Spanish government bonds slumped, pushing the 10-year yield to a euro-era record of as much as 7.29 percent. The bonds are the worst performers among 26 developed markets since June 9, when Economy Minister Luis de Guindos said he would request as much as 100 billion euros ($127 billion) of emergency loans from the euro area to shore up a Spanish banking system hobbled by bad assets.

BMW, Daimler

BMW increased 2.1 percent to 57.14 euros. Daimler advanced 2.1 percent to 34.74 euros. MAN SE rose 2.2 percent to 80.25 euros after saying the German truckmaker’s owner, Volkswagen AG, intends to raise its stake in next 12 months.

ThyssenKrupp rose 1.8 percent to 12.20 euros after Cia. Siderurgica Nacional SA, Brazil’s third-largest steelmaker by output, said it may consider bidding for a steel plant in Rio de Janeiro state. CSN is waiting for ThyssenKrupp to disclose further details about the plant before considering a possible bid, Chief Executive Officer Benjamin Steinbruch told reporters at an event in Rio on June 16.

Rheinmetall, the maker weapons for the Leopard 2 battle tank, rallied 6.7 percent to 36.77 euros after a report in Bild am Sonntag that Saudi Arabia will order 800 of the vehicles.

Rheinmetall Order

The total value of the order could reach about 10 billion euros, the German newspaper reported yesterday. Peter Ruecke, a spokesman at Dusseldorf-based Rheinmetall, declined to comment on the report today.

Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, rose 3.2 percent to 6.12 euros for the biggest gain in the DAX. Fresenius Medical Care AG, the world’s biggest provider of kidney dialysis, advanced 2.2 percent to 53.54 euros.

Commerzbank AG (CBK), Germany’s second-largest lender, fell 4.4 percent to 1.36 euros, the biggest decline in a month. Deutsche Bank AG slipped 1.1 percent to 28.16 euros.

“Commerzbank is involved in very bad credit, especially in the more negatively affected countries in the euro-zone area,” said Robert Halver, head of capital markets research at Baader Bank AG.

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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