German Stocks Rise, Reversing Earlier Decline; Deutsche Bank Leads Gains

German stocks climbed for a second day, as the benchmark DAX Index (DAX) extended its rebound from the lowest level since February 2010, amid speculation the slump isn’t commensurate with the outlook for earnings.

The DAX gained 200.08, or 3.5 percent, to 5,997.74 at the 5:30 p.m. close in Frankfurt, trimming this week’s drop to 3.8 percent. The gauge had tumbled 20 percent from this year’s high on May 2 amid concern that the global economic recovery is stalling, while European leaders struggled to contain the sovereign-debt crisis. The broader HDAX Index climbed 3.4 percent today.

The decline dragged the price-to-earnings ratio on the DAX to 9 times its constituents’ estimated profits, close to the ratio of 8.2 reached in October 2008, five months before the bull market in equities began, according to data compiled by Bloomberg.

“Valuations are cheap as long as the earnings estimates are somewhere near right,” said Andy Lynch, who manages about $1.9 billion at Schroder Investment Management Ltd. in London, in a Bloomberg Television interview. “There are some individual opportunities out there, but at the aggregate level, there are still some headwinds.”

Earnings for companies in the DAX will grow 27 percent over the next 12 months, according to data compiled by Bloomberg.

Deutsche Bank AG (DBK), Germany’s largest bank, advanced 4 percent to 30.29 euros, while competitor Commerzbank AG (CBK) jumped 5.4 percent to 2.21 euros. Adidas AG (ADS), the maker of sporting goods, gained 2.2 percent to 49.42 euros, while Metro AG, Germany’s biggest retailer, rose 5 percent to 32.78 euros.

IVG Immobilien AG (IVG) sank 4.5 percent to 3.53 euros after posting an unexpected loss. The company reported a second- quarter net loss of 68.8 million euros ($98 million). The German real-estate company also forecast a loss for the full year.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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

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