German Stocks Advance as Continental Climbs; DAX Index Posts Monthly Gain
German stocks rose, extending their monthly gain, as a report showed U.S. business activity expanded at a faster pace than projected, signaling manufacturing is driving growth in the world’s largest economy.
Merck KGaA and Continental AG rose more than 1.5 percent as analysts recommended the shares. HeidelbergCement AG lost 3.4 percent after reporting a decline in second-quarter net income and giving no forecast.
The DAX Index rose 0.2 percent to 6,147.97 at the 5:30 p.m. close in Frankfurt, extending its weekly gain to 0.3 percent. The measure has increased 3.1 percent this month as demand at bond auctions in Greece, Spain, and Portugal eased concern that Europe’s sovereign-debt crisis will derail the economic recovery. The broader HDAX Index rose 0.1 percent today.
“Firms are flush with cash, very profitable, and ramped up productivity even in the depth of the recession,” said Bernd Weidensteiner, Frankfurt-based U.S. economist at Commerzbank AG. “Investment spending -- at least in machinery -- already picked up noticeably. Sooner or later, this will boost employment.”
The Institute for Supply Management-Chicago Inc. said today its U.S. business barometer rose to 62.3 this month, exceeding the median forecast of economists surveyed by Bloomberg News. Figures greater than 50 signal expansion. Economists forecast the Chicago group’s gauge would fall to 56, according to the median of 53 survey projections.
U.S. Growth
The employment measure, the gauge of new orders and the gauge of inventories all increased, while a Commerce Department report showed U.S. growth slowed to a 2.4 percent annual rate in the second quarter, less than forecast, reflecting a larger trade deficit and an easing in consumer spending.
Merck climbed 1.7 percent to 68.30 euros. The pharmaceutical and chemicals company was raised to “outperform” from “underperform” at Credit Suisse Group AG.
Continental, Europe’s second-largest auto-parts supplier, rallied 1.9 percent to 48.95 euros. The stock was raised to “buy” from “accumulate” at Equinet AG, which said the company is “an excellent possibility to play the ongoing recovery of the automotive market as it is also well positioned to continue growing once the recovery of the broad market is over.”
European Aeronautic, Defence & Space Co. rose 3 percent to 18.07 euros in Frankfurt after raising its target for 2010 net income and revenue as deliveries of passenger jets at its Airbus unit increase.
EADS Sales
Sales will grow to more than 44 billion euros ($57.5 billion) from 42.8 billion euros in 2009 and adjusted earnings before interest and tax should reach about 1.2 billion euros, EADS, based in Paris and Munich, said. In March, the company predicted Ebit of 1 billion euros and stagnant sales.
EnBW Energie Baden-Wuerttemberg AG climbed 1.2 percent to 37.23 euros as the utility raised its 2010 earnings outlook after it transmitted more power with higher fees and the company sold its GESO utility operator later than planned.
HeidelbergCement sank 3.4 percent to 38.65 euros, ending the stock’s longest winning streak since March. The world’s largest maker of aggregates used to produce concrete and asphalt gave no forecast, only stating that it plans to benefit over proportionally from the economic recovery this year and next. The recovery’s strength and the impact of budget-deficit cutting on infrastructure spending are still unclear, Chief Executive Officer Bernd Scheifele said. Rival Lafarge SA cut its outlook for cement demand in its markets in 2010.
HeidelbergCement Drops
Second-quarter net income for HeidelbergCement fell 64 percent to 120 million euros, as a year earlier it had a gain from selling a stake in Indonesia’s second-largest cement maker and a tax gain. Net income trailed the mean estimate of 207.7 million euros in a Bloomberg survey.
GEA Group AG tumbled 2.9 percent to 17.37 euros. The engineering company, whose machines milk a third of the world’s dairy cows, said second-quarter net income fell to 28.8 million euros from 32.4 million euros.
Software AG slumped 3.8 percent to 85.56 euros as Germany’s second-largest software maker was downgraded to “sell” at Piper Jaffray Ltd. and at B. Metzler Seel. Sohn & Co. KGaA.
To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.
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