Bloomberg News

German Stocks Rise; Deutsche Bank, ThyssenKrupp Lead Gain

August 27, 2012

German stocks rose as Finance Minister Wolfgang Schaeuble said the continent’s two largest economies will create a working group to strengthen the euro area’s fiscal and monetary union, offsetting a fall in business confidence.

Deutsche Bank AG (DBK), the country’s largest lender, paced gains, rising 2.4 percent. ThyssenKrupp AG (TKA) rose 1.7 percent after a report it wants to sell some steel plants. Rhoen- Klinikum AG fell 0.7 percent as B. Braun Holding GmbH took a stake of at least 5 percent in the German hospital operator.

The DAX Index (DAX) climbed 1.1 percent to 7,047.45 at the close of trading in Frankfurt. The measure has still rallied 18 percent from this year’s low on June 5 as European Central Bank President Mario Draghi said he would do everything possible to preserve the euro. The broader HDAX Index added 1 percent today.

The volume of shares changing hands on the DAX was 39 percent below the average of the last 30 days, according to data compiled by Bloomberg.

Schaeuble said today that Germany and France will seek to develop common proposals on a fiscal, banking and monetary union. He also told reporters, after meeting with French Finance Minister Pierre Moscovici in Berlin today, that the two countries will look for measures to boost economic growth.

Next month, the European Central Bank will formulate a bond-buying plan and representatives of Greece’s international creditors will issue a progress report. A German court will also announce its decision on the legality of the euro area’s proposed permanent bailout fund.

Business Confidence

German business confidence fell for a fourth straight month in August as the sovereign debt crisis curbed growth in Europe’s largest economy.

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 102.3 from 103.2 in July. That’s the lowest reading since March 2010. Economists predicted a decline to 102.7, according to the median of 37 forecasts in a Bloomberg News survey.

German economic growth slowed to 0.3 percent in the second quarter from 0.5 percent in the first as the debt crisis damped demand for exports and prompted companies to postpone investments. While sales to faster-growing markets outside Europe and domestic spending are helping to insulate Germany from the turmoil, the Bundesbank said last week that the prevailing uncertainty may cause the economy to cool further.

Bernanke Speech

Investors are awaiting a speech from Federal Reserve Chairman Ben S. Bernanke on Aug. 31 in Jackson Hole, Wyoming. His speech in 2010 preceded a second round of bond purchasing, or quantitative easing, to help support the economic recovery. Draghi is scheduled to speak on Saturday.

“The market is hoping to get something similar this time after that last round made a massive impact on stock markets,” Lars Mogeltoft, a chief equity adviser at Nordea Private Bank in Copenhagen, wrote in a note to clients. “Draghi’s speech will also be scrutinized for any indications as to how to handle the debt crisis.”

Bernanke said in a letter to Californian Republican Darrell Issa, the chairman of the House Oversight and Government Reform Committee, released late last week that “there is scope for further action by the Federal Reserve.”

China’s Premier Wen Jiabao has urged extra measures to support exports and help meet economic targets as a report today showed that industrial companies’ profits dropped, adding to evidence that the nation’s slowdown is deepening. Industrial profits fell 5.4 percent in July from a year earlier, the statistics bureau said today.

Deutsche Bank

Deutsche Bank climbed 2.4 percent to 27.92 euros as a gauge of European banks was among the best performers of the 19 industry groups in the Stoxx Europe 600 Index.

ThyssenKrupp advanced 1.7 percent to 16.49 euros after Welt am Sonntag reported that Germany’s biggest steelmaker wants to sell plants in the U.S. and Brazil for at least their book value of 7 billion euros ($8.8 billion). The newspaper cited an interview with Chief Executive Officer Heinrich Hiesinger.

Several parties have shown interest in the assets and the company will wait to see what offers are made, Welt am Sonntag reported. ThyssenKrupp will use the funds for investments and to pay down debt.

Q-Cells SE (QCE) jumped 12 percent to 19 euro cents after South Korea’s Hanwha Group agreed to buy the company which filed for insolvency in April. Hanwha and Q-Cell’s insolvency administrator, Henning Schorisch, signed a deal yesterday. Hanwha will assume “business liabilities in the low hundreds of millions” and a cash purchase price “in the medium double- digit million euro range.”

Rhoen-Klinikum

Rhoen-Klinikum fell 0.7 percent to 20.14 euros as B. Braun Holding GmbH took a stake of at least 5 percent in the German hospital operator and a renewed takeover bid from Fresenius SE failed to materialize.

B. Braun, a closely held maker of medical supplies, notified Rhoen-Klinikum of the stake today, Rhoen-Klinikum said in a statement. Braun, based in Melsungen, Germany, crossed the threshholds of 3 percent and 5 percent, according to the statement.

To contact the reporters on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net; Corinne Gretler in Zurich at cgretler1@bloomberg.net

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


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