Most German Stocks Advance; Deutsche Telekom Rises on T-Mobile Sale Talks

Most German stocks gained even as European Central Bank council member Axel Weber signaled the ECB may raise interest rates several times this year.

Deutsche Telekom AG increased 4 percent as the company held talks to sell its T-Mobile USA unit. BASF SE (BAS), the world’s biggest chemical company, lost 2.1 percent as an industry union demanded a pay increase for workers.

The DAX Index (DAX) was little changed, rising less than 0.1 percent, to 7,164.75 at the 5:30 p.m. close in Frankfurt. The benchmark gauge has rallied 3.6 percent this year as the German economy grew and as corporate profits beat estimates. The broader HDAX Index added 0.1 percent today.

“The rate hike looks imminent,” said Steven Major, global head of fixed income research at HSBC Holdings Plc, talking to Francine Lacqua on Bloomberg Television’s “On The Move.” It “will probably come in April or May and then two or three more afterwards,” he said.

Weber said the ECB has embarked on a normalization of interest rates and he doesn’t want to correct market expectations for as many as three quarter-point increases this year.

ECB President Jean-Claude Trichet yesterday said that the world’s central bankers are united in their aim to prevent surging oil prices from fanning broader inflation.

Crude fell for the first time in three days in New York after Kuwait’s Oil Minister confirmed that the Persian Gulf country has held talks to boost production. Organization of Petroleum Exporting Countries are holding “consultations” and have yet to decide to raise production, Sheikh Ahmad al-Abdullah al-Sabah said.

Greek Bonds

Stocks pared an earlier advance as Greek government bonds slid, driving the yield on the 10-year security to the highest since Bloomberg began collecting the data in 1988. The yield jumped as much as 45 basis points to 12.78 percent, while credit-default swaps insuring Greek government bonds rose 5 basis points to an all-time high of 1,037.

German factory orders, adjusted for seasonal swings and inflation, climbed 2.9 percent in January from December, when they slid 3.6 percent, the Economy Ministry in Berlin said today. Economists had forecast a gain of 2.5 percent, the median of 35 estimates in a Bloomberg News survey shows. Over the year, orders rose 16 percent.

Deutsche Telekom Surges

Deutsche Telekom AG (DTE) rallied 4 percent to 10.01 euros. The company has held talks to sell its T-Mobile USA unit to Sprint Nextel Corp. in exchange for a major stake in the combined entity, said people with knowledge of the matter.

Volkswagen AG (VOW)’s preferred shares gained 2.3 percent to 118.65 euros. Porsche SE, the holding company that owns 51 percent of Volkswagen’s common shares, yesterday recorded a profit in its shortened 2010 business year on gains from VW and profit from the Porsche sports-car business.

“The combination of recent share price correction and still solid operating outlooks supports increasing exposure to the German names in our view,” Philippe Houchois and David Lesne, analysts at UBS in London, wrote in a report to clients today.

BASF lost 2.1 percent to 59.96 euros. German chemical companies may face worker demonstrations over pay in a dispute about the extent of economic recovery, Handelsblatt reported, citing Peter Hausmann, an IG BCE labor-union board member.

The union is demanding a 7 percent wage increase for 550,000 workers in the chemical industry, the newspaper said. Regional negotiations have already started and countrywide talks begin next week, Handelsblatt said.

Stratec Biomedical

Stratec Biomedical Systems AG (SBS) tumbled 5.3 percent to 30.70 euros. The maker of blood analysis equipment reported full-year net income of 13 million euros ($18.2 million), missing the 14.7 million-euro average of analysts surveyed by Bloomberg.

Salzgitter dropped 2.3 percent to 55.69 euros, its fifth loss, as WestLB AG cut the shares to “reduce” from “add.” Germany’s second-largest steelmaker issued an earnings outlook for 2011 that “is significantly below both our forecasts and market expectations,” Ralf Doerper, analyst at WestLB wrote in a note to customers.

To contact the reporter on this story: Giles Broom in Zurich at gbroom@bloomberg.net.

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

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