Germany's DAX Index Rises to Highest Level Since January 2008; BMW Gains

German stocks rose for a fourth day, sending the benchmark DAX Index to the highest level since January 2008, as a rally in carmakers overshadowed an increase in China’s interest rates.

Bayerische Motoren Werke AG rose 4.7 percent as automakers across Europe rallied after Toyota Motor Corp. raised its 2011 profit forecast. Daimler climbed 3.1 percent as Financial Times Deutschland reported that the company wants to sell a 15 percent stake in European Aeronautic Defence & Space Co. this year.

The DAX gained 0.5 percent to 7,323.24 at the 5:30 p.m. close in Frankfurt. The gauge has jumped 5.9 percent this year amid optimism that the global economic recovery is gathering strength. The broader HDAX Index rose 0.6 percent today.

“The private sector is the fuel for the future,” said ABN Amro Private Banking’s Chief Investment Officer Didier Duret, who manages about $200 billion, in a phone interview. “We are seeing a re-acceleration of growth and a broadening of growth momentum. We maintain a rather positive view on equities, though in some areas there are valuation concerns.”

Stocks pared gains after China raised interest rates for the third time since mid-October. The People’s Bank of China increased the one-year deposit rate by 25 basis points effective tomorrow, according to a statement on the central bank’s website. The one-year lending rate was also raised by 25 basis points, the statement said.

“Traders have been expecting more fiscal action from China to curb spiraling inflation and this is seen as the latest move in these efforts,” said Sean Power, an equity analyst at City Index. Ltd. in London.

Industrial Production

Stocks advanced even after a report showed industrial production in Germany, Europe’s largest economy, unexpectedly fell for a second month in December as cold temperatures sparked a construction slump.

Output dropped 1.5 percent from November, when it slipped a revised 0.6 percent, the Economy Ministry in Berlin said today. Economists had forecast a 0.2 percent gain, the median of 38 estimates in a Bloomberg News survey showed.

BMW, the world’s largest maker of luxury cars, gained 4.7 percent to 61.59 euros. Automakers rallied across Europe after Toyota Motor Corp. raised its full-year profit forecast by 40 percent.

Daimler, the second-biggest luxury carmaker, rose 3.1 percent to 55.28 euros. The company wants to sell its 15 percent stake in EADS, Financial Times Deutschland reported, without saying where it got the information.

Daimler is due to be questioned as soon as tomorrow by Paris judges leading a nearly five-year-old probe into insider trading at EADS, according to a person familiar with the case. “We will cooperate,” said Florian Martens, a spokesman for Daimler.

Deutsche Wohnen AG climbed 4.5 percent to 10.78 euros. Germany’s second-largest publicly traded residential landlord was rated “overweight” in new coverage at Morgan Stanley.

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..

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.