Jan. 2 (Bloomberg) -- German stocks rose on the first day of trading in 2007, led by Metro AG, ThyssenKrupp AG and RWE AG, on speculation that mergers and acquisitions will drive equities higher.

The DAX Index climbed 84.21, or 1.3 percent, to 6681.13, the highest close since February 2001. The gauge gained 22 percent last year. DAX futures expiring in March today added 79.5, or 1.2 percent, to 6732 as of 5:47 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies increased 43.72, or 1.3 percent, to 3447.32.

Metro, Europe's third-largest retailer, advanced 2.75 euros, or 5.7 percent, to 51.06 euros after surging as much as 6.6 percent on speculation one of the German company's founding families may take over the company.

``Rumors the Haniel family might want to completely take over the company are boosting the stock,'' said Christof Ruemmelein, a trader at Merck Finck & Co. in Munich. The family, which owns about 18 percent of Metro's shares, isn't buying stock in the retailer, Jutta Stolle, the Haniel family's spokeswoman, said today.

About 50 percent of the Dusseldorf-based company's shares are owned by three founding families. In addition to the Haniel stake, the Otto Beisheim family owns 18 percent and the Schmidt- Ruthenbeck family holds about 14 percent of Metro's stock.

``I didn't expect takeover speculation to reaccelerate that quickly after the holidays, but if you look at the share price, this seems to be a little more than just a rumor,'' said Frank Schallenberger, an equity strategist at Landesbank Baden- Wuerttemberg in Stuttgart, Germany. ``M&A will remain a driver of the stock markets in 2007.''

Metro spokesman Juergen Homeyer said the company won't comment on market speculation.

Steelmakers, Utilities Gain

ThyssenKrupp, the nation's largest steelmaker, advanced 1 euro, or 2.8 percent, to 36.69 euros. Tata Steel Ltd. may raise its offer for the U.K. steelmaker Corus Group Plc by as much as 10 percent, the Business Standard reported, without saying where it obtained the information.

Shares of Salzgitter AG, Germany's second-largest steelmaker, rose 2.55 euros, or 2.6 percent, to 101.6.

RWE, the country's second-largest utility, climbed 1.95 euros, or 2.3 percent, to 85.45. E.ON AG, the world's biggest utility by sales, added 1.37 euros, or 1.3 percent, to 104.2.

Strategists at Citigroup Inc. lifted their recommendation on utility stocks to ``overweight'' from ``neutral,'' citing attractive valuations relative to bonds in a report published today.

Separately, new speculation about mergers and acquisitions in the industry emerged after French billionaire Francois Pinault said that all options remain open regarding a possible bid for Suez SA, the world's second-largest water company and owner of Belgium's biggest power producer.

``New takeover speculation is boosting utility stocks after Suez and Gas Natural were named as potential targets today,'' said Thomas Nagel, a trader at Equinet Securities AG in Frankfurt.

The following stocks also gained or fell in the German market. Stock symbols are in parentheses.

Allianz SE (ALV GY) increased 1.74 euros, or 1.1 percent, to 156.5 euros. The German insurer's banking arm Dresdner Bank AG aims to grow between 4 percent and 7 percent in the next few years, which is faster than the market, Frankfurter Allgemeine Zeitung reported, citing the lender's Chief Executive Officer Herbert Walter.

BASF AG (BAS GY) climbed 97 cents, or 1.3 percent, to 74.82 euros. The world's largest chemical producer sold its stake in South Korea's Hanwha Chemical Corp. for about $129 million, Reuters reported, citing the Korean company.

Bilfinger Berger AG (GBF GY), the country's second-largest construction company, gained 79 cents, or 1.4 percent, to 56.31 euros. Chief Executive Officer Herbert Bodner expects Germany's construction industry to continue to stabilize this year with ``slight'' growth anticipated in the medium term, DPA-AFX reported, citing an interview with Bodner.

DaimlerChrysler AG (DCX GY), the world's fifth-largest carmaker, gained 80 cents, or 1.7 percent, to 47.6 euros. The company picked China's Chery Automobile Co. to build small cars for its U.S.-based Chrysler unit, the first plan by a major automaker to sell Chinese cars in the world's largest auto market.

Separately, China's Ministry of Commerce approved a joint venture with China Motor Corp. to produce vans in China, DaimlerChrysler said today.

Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, upgraded the carmaker's shares to ``buy'' from ``sell'' and increased his price estimate by 38 percent to 55 euros.

Deutsche Boerse AG (DB1 GY) advanced 3.54 euros, or 2.5 percent, to 142.96. The operator of the Frankfurt bourse plans to expand through alliances rather than acquisitions following the failure to take over Euronext NV, Boersen-Zeitung reported, citing Chief Executive Officer Reto Francioni.

Deutz AG (DEZ GY), a 142-year-old German maker of diesel motors for trucks and ships, surged 85 cents, or 8.5 percent, to 10.9 euros after Deutsche Presse-Agentur reported the company plans to pay its first dividend in more than 20 years.

Itelligence AG (ILH GY) dropped 12 cents, or 3.2 percent, to 3.61 euros. UniCredit Markets & Investment Banking (HVB) cut its recommendation for shares of the computer-services company to ``hold'' from ``buy'' after they reached its price estimate of 3.7 euros.

Krones AG (KRN GY) jumped 7.06 euros, or 6.1 percent, to 122.9, the most since July. UBS AG raised its share-price estimate for the maker of bottling and packaging equipment by 16 percent to 140 euros.

Sven Weier, an analyst at UBS in Frankfurt cited ``upside potential from better working capital'' and ``a more efficient balance sheet'' in a report published today. He has a ``buy'' recommendation on the stock.

Siemens AG (SIE GY) Europe's largest engineering company, climbed 79 cents, or 1.1 percent, to 75.93 euros. MTS Group, a joint venture between Siemens and holding company Africa Israel Investments Ltd., won a contract to build and run a light railway network for greater Tel Aviv, Israel's biggest commercial and population center.

Singulus AG (SNG GY) dropped 32 cents, or 2.6 percent, to 11.81 euros. The German maker of machines that produce compact discs and DVDs is planning to expand into solar technology to lessen dependence on the market for DVDs, Chief Executive Officer Stefan Baustert told Handelsblatt.

``We see no reason to change our cautious stance on Singulus as the current business performance is disappointing and the outlook for 2007 seems to be more muted than some months ago,'' wrote Peter Rothenaicher, an analyst at Unicredit in Munich, in a report published today. He has a ``sell'' recommendation on the stock.

To contact the reporter on this story: Andreas Hippin in Frankfurt at ahippin@bloomberg.net

Last Updated: January 2, 2007 12:14 EST