German Stocks Advance as Deutsche Telekom, Drillisch Gain, Infineon Falls
German stocks rose, with the benchmark DAX Index trimming its weekly decline, after a report showed that the U.S. economy grew more than estimated in the second quarter.
Deutsche Telekom AG rose 2.3 percent and Drillisch AG climbed 5.2 percent as telecommunication shares surged across Europe, posting the best performance among 19 industry groups in the Stoxx Europe 600 Index. Salzgitter AG, Germany’s second- largest steelmaker, rose 1.6 percent, following metal prices higher. SMA Solar Technology AG gained 3 percent after refuting speculation that it was the target of a takeover bid by First Solar Inc. of the U.S. Infineon Technologies AG, Europe’s second-largest chipmaker, declined 1 percent as Intel Corp. cut its third-quarter revenue and gross margin forecasts.
The DAX Index surged 0.7 percent to 5,951.17 at the 5:30 p.m. close in Frankfurt, trimming its weekly decline to 0.9 percent. The gauge has retreated 6.3 percent from this year’s high on Aug. 9 as the Fed said the pace of recovery in the U.S. economy will probably be “more modest” than forecast. The decline has pushed the DAX to its cheapest valuation relative to companies’ reported earnings since 2008, according to data compiled by Bloomberg. The broader HDAX Index also gained 0.7 percent.
“The GDP data today is a glimmer of hope,” said Daniel Weston, Munich-based portfolio manager at Schroeder Equities GmbH, which oversees about $105 million. “It beat consensus estimates, but it’s still a poor number. The growth needs to feed through to jobs and only then will there be real conviction to this equity market.”
U.S. GDP Revised
The U.S. economy grew at a 1.6 percent annual rate in the second quarter, less than previously calculated as companies reined in inventories and the trade deficit widened. The revised increase in gross domestic product was bigger than the 1.4 percent median forecast of economists surveyed by Bloomberg News and compares with a 2.4 percent estimate issued last month, figures from the Commerce Department showed today in Washington.
Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery, and outlined steps it might take if growth slows.
“We do not expect a double dip but rather a mid-cycle slowdown” said Markus Pluemer and Gunnar Hamann, respectively head of equity brokerage and equity strategist at Commerzbank AG in Frankfurt, at a Sector Week press conference today. “Our year-end target for the DAX is 6,900, with limited downside in the coming months but a very volatile trading range.”
Deutsche Telekom, Salzgitter
Deutsche Telekom AG rose 2.3 percent to 10.41 euros as European telecommunications shares surged 2.2 percent. Drillisch AG, the operator of mobile networks for T-Mobile, Vodafone-D2 and E-Plus, gained 5.2 percent to 5.10 euros, the stock’s biggest gain since July 13.
Salzgitter AG rose 1.6 percent to 47.78 euros, extending yesterday’s 0.6 percent advance. Copper, lead, nickel, tin and zinc climbed on the London Metal Exchange.
SMA Solar Technology AG, the maker of solar power equipment, climbed 3 percent to 82.34 euros. “Rumors about a First Solar takeover are baseless,” Anna Raudszus, a spokeswoman for investor relations at SMA Solar, said today by telephone. First Solar spokesman Sebastian Fasbender in Berlin declined to comment.
Commerzbank fell 2 percent to 6.27 euros after Handelsblatt reported that Germany’s second biggest bank plans to sell new shares as early as autumn this year. Commerzbank may sell 5 billion euros ($6.38 billion) or more if the stock market can absorb it so that the German government can exit the Frankfurt- based lender more quickly.
Infineon Slides
Infineon dropped 1 percent to 4.61 euros. Intel now expects third-quarter revenue to be $11 billion, “plus or minus $200 million,” compared with its previous forecast of $11.2 billion to $12 billion.
Intel said its forecast third-quarter gross margin is now 66 percent, “plus or minus a point”, lower than the previous forecast of 67 percent, “plus or minus a couple of points.”
-- With assistance from Alex Webb in Frankfurt. Editors: Will Hadfield
To contact the reporters on this story: Simon Berberich in Frankfurt at sberberich@bloomberg.net; Julie Cruz in Frankfurt at jcruz6@bloomberg.net;
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