Oct. 31 (Bloomberg) -- German stocks climbed, sending the DAX Index to its steepest weekly gain on record, as investors speculated a slump earlier in the month was exaggerated.

Continental AG rallied the most in two weeks after Schaeffler Group said it aims to secure European Union antitrust approval for its acquisition of Europe's second-largest car-parts maker ``as quickly as possible.'' BASF SE, the world's biggest chemical maker, rose 8.4 percent as Denmark's Novozymes A/S lifted its 2008 target and posted better-than-estimated profit.

The benchmark DAX Index advanced 118.67, or 2.4 percent, to 4,987.97, bringing the weekly gain to 16 percent. That's the steepest such jump since at least 1959. DAX futures expiring in December rose 2.3 percent as of 5:41 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies added 2.5 percent.

The DAX Index still sank 14 percent in October, the biggest monthly drop since January. The measure has slumped 38 percent this year on concern bank bailouts in the U.S. and Europe won't prevent a recession as credit-related losses and writedowns reached $680 billion in the worst financial crisis the Great Depression.

``If we are successful in stabilizing the financial market, this will sooner or later impact the real economy,'' said Florian Weber, chief executive officer at German broker Schnigge Wertpapierhandelsbank AG in Dusseldorf. ``Investors sold off shares hand over fist on concern about an economic slowdown, which may result in a recession or even depression,'' he told Bloomberg Television in an interview yesterday.

Weekly Rally

The DAX Index was lifted this week by the rally in Volkswagen AG, which more than doubled in the period, after Porsche SE announced plans to increase its stake in Europe's largest carmaker to 75 percent.

Deutsche Boerse AG, operator of the Frankfurt exchange, will change the rules that govern a stock's inclusion in the DAX Index after gyrations in Volkswagen shares disrupted trading. Starting Nov. 3, the exchange will reserve the right to remove any stock in the DAX whose weight exceeds 10 percent and whose price had annualized volatility over the preceding 30 trading of more than 250 percent, the bourse said.

Separately, based on today's closing prices, Volkswagen's weighting in the DAX Index will be capped to 10 percent and other stocks adjusted. The changes take effect as of the start of trading on Nov. 3.

Continental jumped 2.55 euros, or 8.6 percent, to 32.36, the steepest increase since Oct. 13. Schaeffler is planning to re- file the purchase with EU authorities next week.

`Clarify'

A draft of the deal was returned Oct. 17, requesting the family owned ball-bearing maker to provide more information on Continental and ``clarify other matters,'' Detlef Sieverdingbeck, a spokesman for Schaeffler, said today.

BASF, which makes enzymes used in skin-care products and cosmetics, gained 2.01 euros, or 8.4 percent, to 26.07. Novozymes, the world's biggest maker of enzymes for industrial uses, also raised prices for all the company's industrial enzymes for the first time in two decades.

Merck KGaA increased 4.18 euros, or 6.4 percent, to 69.58, the highest since Oct. 8. Partner Imclone System Inc.'s Erbitux, the cancer medicine which Merck markets in Europe, will get a priority review by the Food and Drug Administration to expand its use with chemotherapy as a first-line treatment for patients with recurring head and neck tumors, the U.S. company said.

Commerzbank AG declined 56 cents, or 6.2 percent, to 8.43 euros. Germany's second-largest bank by assets is interested in taking a capital injection as part of the German government's 500 billion-euro ($637 billion) rescue package for financial institutions to secure the acquisition of Dresdner Bank AG, Platow Brief said, citing no one.

Retail Sales

Simone Fuchs, a Commerzbank spokeswoman, said the bank is still examining the package. She declined to comment further.

Adidas AG, the world's second-largest sporting goods maker, dropped 95 cents, or 3.3 percent, to 27.53. Metro AG, Germany's largest retailer, slipped 32 cents, or 1.3 percent, to 25.08 euros, snapping a two-day advance.

Retail sales in Europe's largest economy fell more than economists anticipated last month as the financial crisis discouraged people from spending, Germany's Federal Statistics Office said today.

The following stocks also rose or fell in German markets. Symbols are in parentheses. Symbols are in parentheses.

Adlink Internet Media AG (LKI GY) plunged 1.06 euros, or 15 percent, to 6.14. The division of United Internet AG that buys and sells online advertising space said nine-month pretax profit dropped 44 percent to 7.8 million euros ($10.1 million) and cut its full-year earnings and sales outlook.

Beiersdorf AG (BEI GY), the maker of Nivea skin creams, slipped 1.40 euros, or 3.3 percent, to 41.10, the first drop in four days. L'Oreal SA, the world's largest cosmetics maker, cut its sales and profit forecasts for the third time in less than four months. Avon Products Inc., the biggest door-to-door cosmetics seller, also lowered its profit-margin target. U.S. competitor Estee Lauder Cos. cut its guidance on Oct. 28.

GEA Group AG (G1A GY) added 73 cents, or 6.9 percent, to 19 11.33 euros, a fourth straight day of gains. The engineer whose machines milk a third of the world's dairy cows reported third- quarter operating profit that beat analysts' estimates.

Repower Systems AG (RPW GY) rallied 36.07 euros, or 51 percent, to 106.44, the steepest gain in at least six years. Majority shareholder Suzlon Energy Ltd. said it may bolster cash reserves by selling some debt to buy Martifer SGPS SA's stake in the German wind turbine maker.

SGL Group AG (SGL GY) fell 1.35 euros, or 8.1 percent, to 15.27, snapping a three-day increase. Merrill Lynch & Co. cut its recommendation for the world's largest maker of carbon and graphite products to ``neutral'' and removed the stock from its ``Europe 1'' list.

To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.

Last Updated: October 31, 2008 13:11 EDT