DAX Benchmark Advances; Shares of Volkswagen, Kontron, Software AG Rise

German stocks advanced for a fifth day, extending a two-month high, as Volkswagen AG (VOW) and Porsche SE reported an increase in profit.

Volkswagen and Porsche jumped more than 4 percent, leading automakers higher. Software AG (SOW), Germany’s second-biggest maker of business software, and Kontron AG (KBC) advanced after posting higher first-quarter net income.

The benchmark DAX Index (DAX) rose 0.7 percent to 7,404.95 at the 5:30 p.m. close in Frankfurt, the highest level since Feb. 18. The measure has climbed 14 percent from this year’s low on March 16 as investors speculated that the global economic recovery will withstand Japan’s March 11 earthquake and popular revolts in the Middle East and north Africa. The broader HDAX Index gained 0.6 percent today.

The U.S. Federal Open Market Committee will release its statement on interest rates at 12:30 p.m. in Washington, after the close of European stock markets. All 83 economists in a Bloomberg survey predict the Fed will keep the main interest rate in a range of zero to 0.25 percent, its level since December 2008.

The central bank will probably confirm that its $600 billion of Treasury purchases, dubbed QE2 for the second round of quantitative easing, will end as planned in June, said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina.

‘Supporting Financial Markets’

“Liquidity from the Fed is still fully supporting financial markets,” said Ansgar Krekeler, a Dusseldorf-based sales analyst at WGZ Bank AG. “Wall Street will most likely welcome a QE3 program and should already start pricing it.”

Volkswagen reported record operating profit in the first quarter of 2011 as Chinese demand for the VW and Audi brands continued to climb, boosting the shares 4.8 percent to 126.50 euros. Porsche soared 5.9 percent to 47.87 euros as its car- making division reported a first-quarter profit gain after a revamp of the Cayenne boosted demand for the sport-utility vehicle.

Daimler AG (DAI), the world’s second-biggest maker of luxury cars, added 1.6 percent to 52.78 euros. European carmakers were the best performers as a group in the benchmark Stoxx Europe 600 Index today.

Software AG jumped 3 percent to 126.55 euros, a fifth straight advance. The company said net income in the first quarter increased to 40 million euros ($59 million) from 28 million euros a year earlier. Sales rose 9 percent to 272.6 million euros.

Kontron, Lufthansa

Kontron advanced 2.4 percent to 8.35 euros after saying first-quarter net income rose to 5.2 million euros in the first quarter from 1.9 million euros a year ago. Kontron expects revenue of 550 million euros for 2011.

Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, gained 2.8 percent to 15.50 euros, its highest level in more than two months. The airline plans to complete a split-up of its German catering business into twelve regional units by July 1 to increase earnings and cut costs, Frankfurter Allgemeine Zeitung reported, citing an internal document of the LSG Sky Chefs unit.

To contact the reporters on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net; Peter Levring in Copenhagen at plevring1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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