Most German Stocks Gain; Benchmark DAX Index On Course for Weekly Advance
German stocks advanced for a fourth day, with the benchmark DAX Index (DAX) posting a weekly gain, after euro-area leaders announced a new aid package for Greece and measures to protect Spain and Italy from higher bond yields.
Adidas AG (ADS) surged 3.5 percent after Chief Executive Officer Herbert Hainer said the company will have “high single-digit” revenue growth in 2011. Volkswagen AG and Porsche SE led European carmakers higher.
The DAX rose 0.5 percent to 7,326.39 at the 5:30 p.m. close in Frankfurt. The gauge climbed 1.5 percent this week amid optimism that European officials will contain the region’s debt crisis. The measure has still slipped 2.7 percent since its high this year on May 2. The broader HDAX Index also increased 0.5 percent today.
“Markets have welcomed the long-expected new aid package for Greece,” said Anita Paluch, a sales trader at ETX Capital in London. “This latest decision to contain the 21-month long debt crisis that threatened to spread to Italy and Spain is however just one of many steps on the path of stability and further efforts are needed to improve the situation in the euro zone.”
After eight hours of talks in Brussels, the euro area’s leaders announced 159 billion euros ($228 billion) of new aid for Greece late yesterday. They also cajoled bondholders into footing part of the bill and empowered the European Union’s 440- billion euro rescue fund to buy the debt of stressed euro nations after a market rout last week sparked concern the crisis was spreading to Spain and Italy. The fund can also aid troubled banks and offer credit-lines to repel speculators.
European Central Bank President Jean-Claude Trichet said the ECB may accept Greek collateral if the country defaults because euro-area states have agreed to provide guarantees. Trichet said heads of government had agreed to back as much as 35 billion euros of Greek bonds in refinancing operations.
Adidas, the world’s second-largest sporting-goods maker, jumped 3.5 percent to 54.96 euros as the company’s CEO rejected “rumors” of a slowdown in second-quarter sales.
“I heard this rumor and honestly don’t know where it’s coming from,” Hainer said in an interview in Buenos Aires. “We definitely confirm fully our guidance. We have said high single- digit revenue growth, net income growth of 10 to 15 percent and you have seen that our first-quarter confirms this already.”
Deutsche Bank raised its recommendation on the stock to “buy” from “hold.”
Deutsche Lufthansa AG (LHA), Europe’s second-largest airline, advanced 1.2 percent to 14.63 euros, its highest price in two weeks. EasyJet Plc said annual profit will beat analysts’ estimates after the discount carrier boosted fares by luring 20 percent more business flyers in the third quarter.
A report today showed that German business confidence declined to the lowest level in nine months in July as the European debt crisis and weakening global demand damped the economic outlook.
The Ifo institute’s business climate index, based on a survey of 7,000 executives, dropped to 112.9 from 114.5 in June. That compared with the median forecast of 42 economists in a Bloomberg News survey for a reading of 113.7.
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