Germany's DAX Advances for Fourth Day as Commerzbank, Deutsche Post Rise
July 27 (Bloomberg) -- Jonathan Stubbs, head of European and U.K. equity strategy at Citigroup Inc., talks with Bloomberg's Haslinda Amin about the results of the stress tests for European banks and his investment strategy. Stubbs, speaking in Hong Kong, also discusses the outlook for the global economy. (Source: Bloomberg)
German stocks climbed with the benchmark DAX Index advancing for a fourth day as Deutsche Post AG rallied and U.S. new home sales beat forecasts.
Deutsche Post, operator of the DHL express-mail and freight business, rose 1.5 percent, after rival FedEx Corp. boosted its net income forecast. Commerzbank AG surged 3.5 percent as every German bank except Hypo Real Estate Holding AG passed the European Union’s stress test on July 23.
The DAX rose 0.5 percent to 6,194.21 at the 5:30 p.m. close in Frankfurt. The measure has still fallen 2.1 percent from this year’s high on April 26 amid concern that the economic recovery is losing steam as indebted European governments slash spending and China takes steps to cool its economy. The broader HDAX Index also gained 0.5 percent.
“Fluctuations of confidence in the European Monetary Union will continue to trigger changes in capital flows affecting equity prices,” Tammo Greetfeld, senior equity strategist at UniCredit Markets & Investment Banking in Munich, wrote in a report today. “We reiterate our view that for the Euro Stoxx 50 the ‘best-case scenario’ for the second half of 2010 is a broad- based sideways move.”
Stocks erased their earlier losses after a report showed sales of U.S. new homes rose more than forecast in June. Purchases increased 24 percent from May to an annual pace of 330,000, figures from the Commerce Department showed today in Washington. The number of sales was the second-lowest since the series began in 1963. May’s 267,000 sales were the worst ever.
Commerzbank Passes Test
Commerzbank AG, Germany’s second-largest bank, rose 3.5 percent to 6.67 euros after its Tier 1 ratio fell to 9.1 percent under the stress test’s simulation of a recession and a sovereign-debt crisis. Regulations require all banks to maintain Tier 1 capital of at least 6 percent.
Deutsche Post increased 1.5 percent to 13.32 euros as rival FedEx, the second-largest U.S. package-shipping company, raised its earnings forecast for this quarter and the full year on improving demand for express and ground deliveries.
ProSiebenSat.1 Media AG, Germany’s largest private broadcaster, jumped 12 percent to 13.96 euros after reporting that second-quarter net income gained 64 percent to 74.5 million euros on improved revenue.
Praktiker AG climbed 6.4 percent to 5.95 euros, its highest price this month. Germany’s second-biggest home-improvement retailer was raised to “buy” from “reduce” at BHF-Bank AG.
Henkel AG & Co., the chemicals producer, fell 1.3 percent to 39.64 euros, leading other chemicals companies lower. Bayer AG slipped 0.6 percent to 45.50 euros.
Beiersdorf AG, the maker of Elastoplast bandages and Nivea skin cream, fell 0.9 percent to 47.06 euros, while Adidas AG dropped 1 percent to 42.15 euros.
To contact the reporter on this story: Alex Webb in Frankfurt on awebb21@bloomberg.net; Julie Cruz in Frankfurt at jcruz6@bloomberg.net
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