German Stocks Climb to 2 1/2-year High; BMW, Hochtief Advance

German stocks climbed to the highest level in 2 1/2 years after the European Central Bank delayed the withdrawal of emergency liquidity measures and purchased more government bonds.

Bayerische Motoren Werke AG (BMW) advanced to an 18-year high as the world’s biggest maker of luxury cars said U.S. sales rose in November. Hochtief AG (HOT), Germany’s largest builder, led construction shares higher as Russia and Qatar won the rights to host soccer’s World Cup. Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, rallied 3.1 percent as Citigroup Inc. recommended the shares.

The DAX rose 1.3 percent to 6,957.61 at the 5:30 p.m. close in Frankfurt, the highest level since June 2008. The measure has risen for three straight months as central bank stimulus measures and company earnings overshadowed concern that some European countries won’t be able to repay their debts. The broader HDAX Index climbed 1.5 percent today.

ECB President Jean-Claude Trichet today said the bank will delay the withdrawal of emergency liquidity measures and keep buying government bonds as the debt crisis creates “acute” tensions in financial markets.

The ECB will offer banks unlimited loans through the first quarter over periods of seven days, one month and three months, Trichet told reporters. Irish and Portuguese bonds surged as ECB officials embarked on a new round of debt purchases, according to traders with knowledge of the transactions.

U.S. Economy

A report today showed the number of Americans signing contracts to buy previously owned homes unexpectedly increased in October, easing concern that the absence of government support is destabilizing the U.S. housing market.

The Federal Reserve’s report on regional activity, known as the Beige Book, said late yesterday that the economy gained strength across much of the U.S. as hiring improved, manufacturing expanded and retailers anticipated a stronger holiday shopping season. The anecdotal information will help policy makers frame the discussion of the economy when they next meet on Dec. 14.

The DAX has surged 17 percent so far this year, compared with a 6.1 percent decline in the Euro Stoxx 50 Index of euro-region equities.

Trends in European stocks during 2010 are likely to repeat themselves next year, and investors should favor shares in countries like Germany and bet against nations in the periphery, Goldman Sachs Group Inc. strategists led by Peter Oppenheimer wrote in a report.

BMW Rallies

BMW gained 4.8 percent to 63.80 euros, the highest close since at least 1992. The automaker’s namesake brand was the top-selling luxury marque in the U.S. in November, overtaking Daimler AG (DAI)’s Mercedes-Benz in year-to-date deliveries and closing in on Toyota Motor Corp.’s Lexus.

U.S. sales for BMW in November rose 30 percent from a year earlier to 20,097, the Munich-based automaker said. Mercedes reported an 8.4 percent increase to 18,208, while Lexus’s deliveries fell 1.4 percent to 18,240.

Volkswagen AG (VOW), Europe’s largest carmaker, added 1.8 percent to 130.15 euros and Daimler rose 3 percent to 53.49 euros.

Lufthansa surged 3.1 percent to 17.45 euros. Citigroup named the airline as a “top pick” for 2011, citing “valuation, restructuring and macro grounds.”

Hochtief, which formed a joint venture in Qatar this year, rallied 3.4 percent to 60.19 euros, the biggest gain in more than two months, as the Arab nation was selected to host the 2022 World Cup. Qatar plans to build 9 soccer stadiums, and Russia, who won the right to host the 2018 tournament, will construct 13.

HeidelbergCement AG (HEI), the world’s third-largest maker of cement, rose 4.5 percent to 45.65 euros.

TUI AG (TUI1) climbed 3.6 percent to 8.58 euros after Crawley, England-based TUI Travel Plc said operating profit rose 11 percent to 447 million pounds ($699.5 million), beating analysts’ estimates.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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