Oct. 5 (Bloomberg) -- German stocks rose, snapping four days of losses, after a report showed U.S. service industries expanded in September for the first time in a year.

Volkswagen AG, Europe’s biggest carmaker, and MAN SE led the gains, climbing more than 2 percent amid speculation Volkswagen may seek to raise its stake in the truckmaker. Commerzbank AG and Deutsche Bank AG, the country’s largest banks, advanced at least 1.7 percent.

The benchmark DAX Index added 0.8 percent to 5,508.85, ending the longest falling streak in a month. The measure has still dropped 4 percent from this year’s high Sept. 28 on concern share prices have outpaced the prospects for economic growth and earnings. The broader HDAX Index increased 0.8 percent today.

“The economic environment, although lacklustre, is continuing to show signs of improvement,” said Daniel Weston, a Munich-based portfolio manager at Schroeder Equities GmbH, which manages about $22 million. “Investors seem to be thinking that the markets have rebounded too far, too quickly and that the economic recovery is going to be a slow and long one.”

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the U.S. economy, rose to 50.9, higher than forecast, from 48.4 in August, according to the group. Fifty is the dividing line between expansion and contraction.

Separate reports showed today Europe’s manufacturing and services industries expanded more than initially estimated in last month, adding to signs the economy is gaining steam after the worst recession in six decades.

Volkswagen, MAN

Volkswagen jumped 4 percent to 113.79 euros, the steepest advance among the 30 DAX stocks, while MAN, Europe’s third- largest truckmaker, gained 2.2 percent to 54.84 euros.

“There is a rumor in the market that Volkswagen might bid for MAN shares at 65 euros apiece,” said Thomas Nagel, a trader at Equinet AG in Frankfurt. “This is sending both companies’ shares up.”

Volkswagen spokesman Michael Brendel said “we’re not commenting on market rumors.”

Commerzbank rallied 2 percent to 7.79 euros. Larger competitor Deutsche Bank added 1.7 percent to 50.67 euros. The lender may buy about 75 percent of Sal. Oppenheim Jr. & Cie. to gain control of the wealth manager, two people familiar with the matter said. Spokesmen for Deutsche Bank and Sal. Oppenheim declined to comment. Deutsche Bank said in August that it made an offer for a “capital stake” in Sal. Oppenheim. It didn’t give further details.

Infineon Technologies AG, Europe’s second-largest maker of semiconductors, added 2.6 percent to 3.73 euros. Metro AG, the nation’s biggest retailer, advanced 2.1 percent to 37.25 euros.

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

Hannover Re (HNR1 GY), Germany’s second-largest reinsurer, climbed 1.5 percent to 31.44 euros after HSBC Holdings Plc raised its recommendation on the stock to “overweight” from “neutral.”

Koenig & Bauer AG (SKB GY) slid 3.8 percent to 11.55 euros, closing at the lowest level since Aug. 14. M.M. Warburg cut its recommendation on the shares to “sell” from “buy” on reported plans by Koenig & Bauer to expand outside the printing- press business, analyst Eggert Kuls wrote in a note to investors today. Acquisitions will siphon off profit to integrate new businesses and raise financing costs, Kuls said.

Leoni AG (LEO GY) climbed 2.2 percent to 14.30 euros. Germany’s biggest maker of electrical cables for cars extended the contract of its Chief Executive Officer Klaus Probst until Dec. 31, 2014, the company said today.

MediGene AG (MDG GY) advanced 4.4 percent to 5.17 euros, the first gain in three days. The company obtained an additional patent from the European Patent Office on the manufacturing process for its EndoTAG-1 drug.

MTU Aero Engines Holding AG (MTX GY) jumped 3.9 percent to 33.24 euros, the biggest advance in a week. The jet- engine maker is in a team that was awarded a nine-year contract from the U.S. Air Force, the company said. The contract will generate sales of more than 300 million euros ($438.6 million) over the life of the agreement, MTU added.

Solarworld AG (SWV GY) rallied 2.4 percent to 15.54 euros, ending two days of losses. The solar company is adding 350 megawatts of production capacity at its Hillsboro site in Oregon because of “good growth prospects” in the U.S.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

Last Updated: October 5, 2009 11:57 EDT