German Stocks Advance as DAX Index Rebounds From Five-Day Slump
German stocks advanced for the first time in six days amid speculation that a 10 percent slide in stocks in the past month has left markets underestimating the outlook for economic and earnings growth.
Munich Re, the world’s largest reinsurer, climbed 2.5 percent as Bank of America Corp. upgraded the shares following an 11 percent five-day slump through yesterday. SAP AG (SAP) fell 1 percent as the world’s biggest business software company suspended operations from its office in Tokyo in the wake of the earthquake.
The benchmark DAX Index (DAX) rose 44.34, or 0.7 percent, to 6,692 at 1:28 p.m. in Frankfurt, having earlier swung between gains and losses. The gauge had tumbled 10 percent from this year’s high on Feb. 18 through yesterday amid concern that higher oil prices prompted by Arab revolts would curb global economic growth and as Japan’s Prime Minister Naoto Kan said the danger of further radiation leaks from the earthquake-damaged Fukushima plant had increased. The broader HDAX Index today gained 0.5 percent.
“The worldwide economic recovery remains on track and we expect markets to recover, once the true local impact of this tragedy becomes clearer,” said Lothar Mentel, who oversees about $3.2 billion as the London-based chief investment officer at Octopus Investments Ltd.
Munich Re advanced 2.5 percent to 107.90 euros. BofA Merrill Lynch said the price decline is overdone and the shares have the potential to rally 40 percent in the next 12 months, as the broker upgraded the shares to “neutral.”
SAP retreated 1 percent to 40.08 euros, the biggest drop among companies in the DAX.
ADVA AG Optical Networking (ADV) rallied 13 percent to 6.05 euros. The company may be taken over or merged with its partner Juniper Networks Inc. (JNPR), DAF Deutsches Anleger Fernsehen reported, citing an interview with ADVA’s Chief Executive Officer Brian Protiva.
Gildemeister AG (GIL) rose 6.6 percent to 15.28 euros as the German maker of cutting tools said it will raise some 83 million euros by selling 4.56 million new shares to Japan’s Mori Seiki Co.
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