Bloomberg News

German Stocks Rise as Investor Sentiment Tops Forecasts

October 16, 2012

German stocks advanced for a second day, the first back-to-back gains in more than a month, as investor confidence exceeded economists’ forecasts.

Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s biggest lenders, increased at least 4 percent as a gauge of banks led gains in the Stoxx Europe 600 Index. (SXXP) Volkswagen AG (VOW) rose 1 percent as Exane BNP Paribas boosted its price estimate on the shares. Wacker Chemie AG (WCH) dropped as Deutsche Bank downgraded the world’s fourth-largest supplier of polysilicon to the microchip and solar-cell industries.

The DAX Index (DAX) climbed 1.6 percent to 7,376.27 at the close of trading in Frankfurt, the biggest gain since Sept. 6. The benchmark gauge has rallied 24 percent from this year’s low on June 5 as European Central Bank policy makers approved an unlimited bond-buying program and the U.S. Federal Reserve started a third round of asset purchases. The broader HDAX Index also soared 1.6 percent today.

“Banking and technology stocks have been the strongest today,” said Raimund Saxinger, a fund manager at Frankfurt- Trust Investment GmbH, which oversees about $22 billion. “With banks, there has been a continuation of the normalization since August after the announcement from the ECB put a floor underneath banks, removing extreme downside risk.”

The ZEW Center for European Economic Research in Mannheim said its index of German investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to minus 11.5 this month from minus 18.2 in September. Economists forecast an increase to minus 14.9, according to the median of 36 estimates in a Bloomberg survey.

Funding Spain

Stocks extended gains after two senior coalition lawmakers said Germany is open to Spain seeking a precautionary credit line from Europe’s rescue fund. This signaled a reversal of Finance Minister Wolfgang Schaeuble’s public position.

The comments by Michael Meister, a deputy caucus leader of Chancellor Angela Merkel’s Christian Democratic bloc, and Norbert Barthle, her party’s budget spokesman, indicate a rolling back of German resistance to a full sovereign bailout for Spain. Schaeuble cautioned Spain against seeking aid on top of its bank bailout as recently as last month.

In the U.S., industrial production rose more than forecast in September, paring the prior month’s slump. Output at factories, mines and utilities climbed 0.4 percent after a 1.4 percent drop in August that was the biggest since March 2009, the Fed said today. The median estimate in a Bloomberg survey of 85 economists called for production to rise 0.2 percent.

Banks Advance

Deutsche Bank and Commerzbank gained 5.1 percent to 34.60 euros and 4.1 percent to 1.56 euros, respectively.

Volkswagen advanced 1 percent to 146.90 euros as Exane raised its share-price forecast for Europe’s biggest automaker by 8 percent to 179 euros.

Bayer AG, Germany’s largest drugmaker, added 3.1 percent to 70.36 euros, its highest price in more than twenty years, as Bank of America Corp. named the stock as one of its preferred health-care shares.

Siemens AG (SIE), Europe’s biggest engineering company, rose 1.4 percent to 77.44 euros, a second day of gains.

Continental AG (CON), Europe’s second-largest auto-parts maker, slid 2.1 percent to 76.31 euros as European car sales plunged the most in almost two years. Registrations dropped 11 percent to 1.13 million vehicles last month from 1.27 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement.

Separately, Finnish tiremaker Nokian Renkaat Oyj forecast second-half operating profit will fall on weak demand.

Lanxess AG (LXS), the German chemical maker, slipped 1.1 percent to 59.92 euros as Kepler Capital Markets cut its recommendation on the stock to reduce from hold. Kepler forecast a share price of 55 euros.

Wacker Chemie slipped 1.5 percent to 45.90 euros, its lowest price since at least 2006, as Deutsche Bank cuts its recommendation on the stock to sell from hold.

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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