German Stocks Advance After U.S., China Manufacturing Expands

German stocks climbed, pushing the benchmark DAX Index to the highest level since May 2008, as reports showed manufacturing expanded in the U.S. and China and Infineon Technologies AG raised its forecast.

Infineon, Europe’s second-largest chipmaker, gained 1.3 percent. Allianz SE rallied 4.7 percent after Credit Suisse Group AG said life insurers will climb as concern about the European sovereign debt crisis ease. Duerr AG gained 2.6 percent after the maker of painting robots for the automobile industry said it may resume dividend payments this year.

The benchmark DAX gained 106.79, or 1.5 percent, to 7,184.27 at the 5:30 p.m. close in Frankfurt. The gauge has climbed 3.9 percent this year amid better-than-forecast economic reports and speculation European leaders will increase their efforts to contain the region’s sovereign debt crisis. The broader HDAX Index also rallied 1.5 percent today, to 3,649.45.

“We find the backdrop for stocks still constructive,” said Mislav Matejka, head of pan-European equity strategy at JPMorgan Chase & Co. in London. “Manufacturing momentum is re- accelerating and there is evidence of the recovery broadening to small businesses, the labor market and credit activity.”

A Million People

The DAX rebounded from a two-day slide amid protests demanding the ousting of Egyptian President Hosni Mubarak. Egypt’s newly appointed Vice President Omar Suleiman offered talks with opposition groups in a bid to end unrest as protesters urged a million people to take to the streets today and force President Mubarak from office.

The anti-Mubarak movement received a boost yesterday from the Egyptian military, which said it recognized “the legitimacy of the people’s demands,” and promised not to fire on peaceful protests.

Stocks extended gains as the U.S. Institute for Supply Management’s factory index increased to 60.8 in January from 58.5 a month earlier. That exceeding the most optimistic forecast in a Bloomberg News survey of economists and was the highest level since May 2004.

A reading of 52.9 for a purchasing managers’ index released by China’s logistics federation exceeded the 50 level dividing expansion and contraction. A PMI from HSBC Holdings Plc and Markit Economics rose to 54.5 from 54.4.

Fastest Pace

In Europe, manufacturing growth was stronger than initially estimated in January, accelerating to the fastest pace in nine months on stronger output in Germany. A gauge of manufacturing in the euro region rose to 57.3 from 57.1 in December, London- based Markit Economics said today. That’s the highest since April and above the initially reported 56.9. Infineon rose 1.3 percent to 7.82 euros. The company raised its full-year forecast after reporting a better-than-predicted first-quarter profit on surging demand for automotive and industrial semiconductors.

Revenue in the year ending September will rise by a mid- teens percentage, compared with a previous “close to 10 percent” growth forecast, Infineon said in a statement today. The operating margin, or the so-called segment result margin, is expected to be a “high teens” percentage of sales, up from a previous mid-to-high teens percentage forecast.

Allianz rallied 4.7 percent to 106.25 euros as Credit Suisse analysts said life insurers will climb as concern about the European sovereign debt crisis ease.

Duerr gained 2.6 percent to 24.73 euros after saying it expects a dividend payment can be resumed for 2010 after the company returned to after-tax profit. Deutsche Bank AG rose 1.6 percent to 43.88 euros. Germany’s biggest bank said fourth-quarter profit fell about 54 percent on costs. Net revenue rose 35 percent to 7.4 billion euros ($10.2 billion), beating estimates. WestLB upgraded the shares to “add” from “neutral.”

Metro AG, Germany’s largest retailer, climbed 3.3 percent to 53.12 euros as UBS AG upgraded the stock to “buy” from “neutral.” The company “is on track for a period of solid double digit profit growth,” a team of London-based analysts at UBS, including Matthew Taylor, wrote in a report today. [bn:WBTKR=NDA:GY]

Aurubis AG [] fell 4.4 percent to 39.30 euros after saying it expects to post a first-quarter operating loss of 21 million euros.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

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

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