German Stocks Advance; MAN SE, Beiersdorf Advance as E.ON, RWE Shares Fall
German stocks advanced after applications for unemployment benefits in the U.S. fell more than forecast last week, easing investors’ concern that employers are firing more people as the economy slows down.
MAN SE increased following the extension of subsidies for its trucks in Brazil. Analysts recommended buying Daimler AG shares. Deutsche Bank AG rose as investors speculated that capital rules in the banking industry may be more lenient than previously thought. Beiersdorf AG increased after an analyst said Procter & Gamble Co. should look at buying the German maker of Nivea skin cream and Elastoplast bandages.
The DAX Index climbed 57.08, or 0.9 percent, to 6,221.52 at the 5:30 p.m. close in Frankfurt. The DAX dropped 3.6 percent in August as concern mounted that the global economic rebound will slow down, hurting German exporters. The broader HDAX Index gained 1 percent today.
Alberto Espelosin, strategist at Ibercaja Gestion SA in Zaragoza, Spain, said stocks are nearing levels that in the past have prevented further gains.
“Should we break these important technical resistances this time, we could see a further rally of about 5 percent,” the strategist, who helps oversee about $12 billion, said. The DAX last month failed to climb above 6,387, before dropping 2.6 percent from that level.
U.S. Jobless Claims
Initial jobless claims dropped by 27,000 to 451,000 in the week ended Sept. 4, Labor Department figures showed today. The total number of people receiving unemployment insurance was little changed, while those getting extended payments rose. Applications for jobless benefits were projected to fall to 470,000 from a previously reported 472,000 for the prior week, according to the median forecast of 46 economists in a Bloomberg News survey.
MAN increased 2.4 percent to 74.22 euros. Europe’s third- largest truckmaker will benefit from an extension yesterday of subsidies to the Brazilian truck market, BofA Merrill Lynch Global Research wrote in a report today.
“We see scope for MAN to raise guidance for 2010 and think the capital markets day in Sao Paulo on Sept. 17 will be a positive catalyst,” Merrill’s note said. “The valuation remains very attractive and it remains a top sector pick.”
Daimler, Beiersdorf Climb
Daimler advanced 2.6 percent to 43.08 euros. The maker of Mercedes-Benz cars is likely to increase its full-year forecast for earnings before interest and taxes to more than 7 billion euros ($8.9 billion) from 6 billion euros currently, Credit Suisse Group AG analyst Arndt Ellinghorst wrote in a report.
Deutsche Bank gained 2.1 percent to 50.02 euros. Commerzbank AG advanced 2.6 percent to 6.45 euros. Robert Peston, the business editor of British Broadcasting Corp., reported on his blog that regulators will ask banks to hold a core Tier 1 ratio of 7 percent as part of Basel III rules to be completed on Sept. 12. That is lower than the 8 percent and 9 percent demanded by countries including the U.S., the U.K. and Switzerland.
Beiersdorf gained 1.4 percent to 43.94 euros. Procter & Gamble Chief Executive Officer Bob McDonald should pursue skin- cream maker Beiersdorf or Estee Lauder Cos. as he seeks to acquire international brands, Deutsche Bank AG analyst William Schmitz said in an interview.
RWE AG fell 0.7 percent to 53.85 euros. E.ON AG declined 0.5 percent to 23.34 euros. Chancellor Angela Merkel’s plan to extend the operating lives of German nuclear-power plants requires approval from the upper house of parliament, Handelsblatt said, citing former high-court chief justice Hans- Juergen Papier.
The government can’t extend the plants’ life beyond 2022 with only the lower house’s approval, Papier says in a paper to be published in Neue Zeitschrift fuer Verwaltungsrecht, a legal journal, Handelsblatt reported. Merkel’s governing coalition lacks a majority in the upper house.
“It is most likely that the opposition and some federal states will file a lawsuit against any decision that is going to be taken without consent from the upper house,” Mainfirst Bank AG wrote in a report today, as it downgraded its recommendation on RWE to “neutral” from “buy.”
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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