German Stocks Increase as Metro, Henkel, ProSiebenSat.1 Media Shares Gain
German stocks advanced after reports showed that the manufacturing industries in both the U.S. and China grew at a faster pace in August.
Metro AG and Henkel AG jumped after analysts raised their recommendations on the two stocks. ProSiebenSat.1 Media AG soared 8.2 percent after French media company Vivendi SA raised its full-year forecast.
The DAX Index climbed 2.7 percent to 6,083.9 at the 5:30 p.m. close in Frankfurt. The gauge has retreated 4.2 percent from this year’s high on Aug. 9 as the U.S. Federal Reserve said the pace of recovery in the world’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 2.7 percent.
“Chinese manufacturing was not as bad as the market suggested it would be, giving a bit of a positive surprise to investors,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “Investors are starting to buy equities slowly but steadily as bonds are not an alternative, offering a yield that is too low.”
U.S. Factory Orders
Stocks extended gains after the U.S. Institute for Supply Management’s gauge of manufacturing unexpectedly rose to 56.3 in August from 55.5 a month earlier, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth. Economists forecast the ISM factory index would decline to 52.8, according to the median of 78 predictions in a Bloomberg News survey. Estimates ranged from 49.9 to 56.
“We stand by our view that the U.S. economy will be spared a double-dip recession, and the ISM’s movements support this forecast,” said Bernd Weidensteiner, a Frankfurt-based U.S. economist at Commerzbank AG.
China’s purchasing managers’ index for August climbed to 51.7 from 51.2, exceeding forecasts, according to a government- backed report, signaling that the economy’s slowdown is stabilizing. A separate PMI released by HSBC Holdings Plc and Markit Economics increased to 51.9 from 49.4.
Metro, Germany’s biggest retailer, gained 5.4 percent to 42.33 euros after it was raised to “outperform” from “market perform” at Sanford C. Bernstein & Co.
Henkel climbed 3.1 percent to 38.24 euros as the maker of Right Guard deodorant and Persil detergent was raised to “buy” from “hold” at Royal Bank of Scotland Group Plc.
ProSiebenSat.1, TUI Climb
ProSiebenSat.1 Media, Germany’s biggest private broadcaster, jumped 8.2 percent to 15.33 euros after French media company Vivendi raised its full-year forecast following first-half net income that beat analysts’ estimates. Vivendi’s profit for the six months rose 4 percent to 1.53 billion euros ($1.96 billion), more than the average estimate of 1.49 billion euros from eight analysts surveyed by Bloomberg.
TUI AG climbed 5.1 percent to 8.36 euros after Financial Times Deutschland reported that it may buy the shares in London- listed subsidiary TUI Travel Plc that it doesn’t already own.
Phoenix Solar AG, the Sulzemoos, Germany-based solar power company, rose 3.9 percent to 28.88 euros after signing its first contract in Slovakia with Green Energy Slovakia s.r.o to build a 2.2-megawatt solar plant near the capital Bratislava.
European Aeronautic Defence & Space Co. advanced 3.4 percent to 17.87 euros after Emirates, the world’s biggest airline by international traffic, said it needs to spend more than $28 billion dollars over the next seven years to expand its fleet of jets, including those made by Airbus SAS, the EADS subsidiary.
Daimler AG gained 5.5 percent to 40.46 euros after being raised to “neutral” from “sell” at UBS AG.
To contact the reporters on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.
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