German Stocks Rise as Merck and Volkswagen Lead Gain; Kontron Shares Fall

German stocks rose, extending the first weekly increase in about two months, as gains in Merck KGaA and Volkswagen AG offset losses in Kontron AG.

Merck rose 1.9 percent after the drugmaker won approval to sell its multiple sclerosis treatment in Russia. Preferred shares of Volkswagen increased 1.5 percent as the carmaker forecast higher earnings in 2010 along with sales. Centrosolar Group AG climbed 6.8 percent after almost doubling its 2010 earnings forecast on international sales and efforts to reduce costs. Kontron sank 18 percent after the company said it’s setting aside 34 million euros ($42.7 million) in risk provisions for outstanding receivables.

The DAX rose 11.95, or 0.2 percent, to 6,077.19 in Frankfurt. The measure rallied 4 percent last week amid optimism that European stress tests will ease concern about the region’s financial system. Still, the gauge is down 4 percent from its April 26 high on concern that the sovereign-debt crisis in Europe and slowing growth in China and the U.S. will hurt German companies. The broader HDAX Index also gained 0.2 percent today.

Merck rose 1.9 percent to 61.01 euros. The drugmaker won approval to sell its Cladribine pill to treat multiple sclerosis in Russia, where it expects to start selling the medicine early next year.

“This is the first approval ever of an oral therapy for the treatment of multiple sclerosis,” Kepler Capital Markets wrote in a note. “Although the commercial potential of the Russian market has its limits, the registration is an important milestone for bringing this novel multiple sclerosis therapy to the market.”

Volkswagen preferred shares gained 1.5 percent to 73.22 euros. The carmaker will boost earnings in 2010 along with sales, Chief Executive Officer Martin Winterkorn was cited as saying by the Sueddeutsche Zeitung.

Fraport, Siemens

Fraport AG rose 1.3 percent to 37.24 euros as the Frankfurt airport operator said passenger numbers increased 12 percent in June. Separately, BofA Merrill Lynch Global Research initiated coverage of the stock with a “buy” recommendation.

Siemens AG increased 1.3 percent to 74.15 euros. Europe’s biggest engineering company is negotiating to sell its 35 percent stake in Voith Hydro Holding GmbH & Co., a hydro- electric power plant maker, to Voith AG, Sueddeutsche Zeitung reported, citing people familiar with the matter.

Centrosolar, Kontron

Centrosolar surged 6.8 percent to 5.18 euros. Profit may reach 24 million euros to 28 million euros this year, compared with a previous forecast of 14 million euros to 16 million euros, the Munich-based company said in a statement today. Centrosolar expects to achieve or slightly exceed its goal for 370 million euros in sales this year.

Kontron plummeted 18 percent to 6.17 euros. The maker of miniature computers for slot machines and drone aircraft said it’s setting aside 34 million euros in risk provisions for outstanding receivables due from customers in Malaysia, Taiwan and Hong Kong.

Equinet AG and WestLB AG downgraded the stock to “hold” and “neutral,” respectively. Both brokerages previously rated Kontron a “buy.” Separately, BHF-Bank lowered its recommendation to “reduce” from “strong buy” and Independent Research GmbH downgraded Kontron to “sell” from “hold.”

Aixtron AG, the maker of equipment used to produce LED screens, surged 4.4 percent to 23.46 euros. “We believe that the second-quarter earnings season will be positive for the European software and semiconductor sectors,” UniCredit Research said in a note. With regard to Aixtron, the brokerage expects “guidance for a stable order trend and consensus upside revisions due to the favorable dollar.”

To contact the reporter on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net.

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