German Stocks Climb for Third Day as Adidas, BASF, Linde Shares Advance

German stocks climbed for a third day ahead of the results of stress tests on European banks, while net income from Adidas AG beat estimates and a survey showed business confidence unexpectedly surged.

Adidas rose 2.1 percent after reporting a gain in profit that exceeded estimates on soccer’s World Cup. BASF SE and Linde AG advanced after Akzo Nobel NV’s second-quarter profit beat analysts’ forecasts.

The benchmark DAX Index increased 0.3 percent to 6,161.2 at 4:57 p.m. in Frankfurt, bringing its rally this week to 2 percent. The measure has fallen 2.7 percent from this year’s high on April 26 amid concern the global economic recovery is losing steam as indebted European governments slash spending and China takes steps to cool its economy. The broader HDAX Index rose 0.3 percent to 3,117.05.

“Stress tests are better than no stress tests,” Torsten Martens, senior portfolio manager at MEAG Munich Ergo Asset Management, said on Bloomberg Television this morning. “I hope we will get more detail this evening, but I’m not sure about it.”

The tests will establish whether European banks have enough capital, defined as a Tier 1 capital ratio of at least 6 percent, to withstand a recession and a sovereign-debt crisis, according to a document from the Committee of European Banking Supervisors. Lenders that fail the tests will have to raise additional capital. CEBS and national regulators will publish the results from 6 p.m. Brussels time today.

Business Climate

The Ifo institute said its business climate index, based on a survey of 7,000 executives, jumped to 106.2, its highest level since July 2007, from 101.8 in June. That’s the biggest monthly increase since records for a reunified Germany began in 1990. Economists expected a decline to 101.5, according to the median of 41 analysts’ forecasts in a Bloomberg News survey.

Adidas, the world’s second-largest sporting-goods maker, jumped 2.1 percent to 42.54 euros after saying net income increased to 126 million euros ($161.5 million), compared with 9 million euros a year earlier. That beat the 70.9 million-euro average estimate of four analysts. Revenue rose 19 percent to 2.9 billion euros.

Deutsche Lufthansa AG, Europe’s second-largest airline, advanced 2.3 percent to 12.46 euros, its highest price in a week, ahead of next week’s earnings announcement.

BASF, the world’s biggest chemical company, gained 1.5 percent to 46.66 euros. Akzo Nobel, the biggest paint maker, said second-quarter net income attributable to shareholders rose to 273 million euros from 155 million euros a year earlier, beating the average estimate of 190 million euros from 10 analysts in a Bloomberg survey.

Linde, the Munich-based gases company, climbed 1.2 percent to 89.87 euros. European chemicals shares in the Stoxx 600 Index rallied 0.9 percent.

To contact the reporters on this story: Alex Webb in Frankfurt at awebb21@bloomberg.net

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