DAX Rallies on Signs Global Economy May Avoid Recession; Allianz Gains

German stocks gained, rebounding from two days of losses, after signs the global economy may avoid slipping back into recession and Hurricane Irene subsided.

Allianz SE (ALV), Europe’s biggest insurer, climbed 3.3 percent, and Munich Re, the world’s largest reinsurer, rose 4.1 percent as the cost of storm damage in the U.S. appeared less than anticipated. Adidas AG (ADS), the world’s second-biggest sporting goods brand, rose 3.7 percent after the Wall Street Journal reported Chief Executive Officer Herbert Hainer is sticking to sales forecasts.

The benchmark DAX Index (DAX) rallied 2.4 percent to 5,670.07 at the 5:30 p.m. close in Frankfurt as all shares in the 30-member gauge rose. The German benchmark has still fallen 25 percent since this year’s peak on May 2. The wider HDAX index also advanced 2.4 percent today.

“Stocks are catching up to U.S. indexes,” said Hendrik Koenig, an equity strategist at B. Metzler Seel. Sohn & Co. KGaA, in Frankfurt. “The market has probably priced in slower economic growth and is stabilizing and looking forward to new data coming out this week.”

Federal Reserve Chairman Ben S. Bernanke told participants at the annual retreat of policy makers and economists in Jackson Hole, Wyoming, this weekend that the U.S. central bank still has a “range of tools” it could use to help the economy if needed. U.S. consumer spending climbed more than forecast in July as Americans dipped into savings to buy cars and cool their homes, showing the biggest part of the U.S. economy is holding up.

Inflation Slowed

In Germany, a Finance Ministry spokeswoman told reporters in Berlin that measures, including increasing the scope of the European Financial Stability Facility and the Basel III accords are already being taken to stabilize the euro area. The remarks came in response to a call by Christine Lagarde, the head of the International Monetary Fund, at Jackson Hole, urging a mandatory recapitalization of European banks.

Inflation in Europe’s largest economy slowed more than economists forecast in August as seasonal food and energy prices declined. The inflation rate, calculated using a harmonized European Union method, fell to 2.4 percent from 2.6 percent in July, the Federal Statistics Office in Wiesbaden said today. Economists predicted the rate would ease to 2.5 percent, according to the median of 16 estimates in a Bloomberg News survey. Prices declined 0.1 percent in the month.

U.S. consumer purchases rose 0.8 percent in July, more than the median 0.5 percent increase estimated by 74 economists surveyed by Bloomberg News. Another report showed contract signings for sales of existing homes fell last month.

Insurers Gain

German insurers rose as the damage from Hurricane Irene’s landfall into population centers on the U.S. eastern seaboard like New York and Washington D.C. was less severe than estimated. Munich Re climbed 4 percent to 89.17 euros while Hannover Re rose 3.9 percent to 32.15 euros. Allianz gained 3.3 percent to 68.32 euros.

Adidas soared 3.7 percent to 47.65 euros after CEO Herbert Hainer told the Wall Street Journal sporting goods are more resistant to slow economic growth and that the company is sticking to its target of an 11 percent operating margin in 2015 and a 15 percent earnings growth rate.

Porsche SE preferred shares rose 5.4 percent to 44.16 euros as the sports-car maker led a gauge of European automobile and parts makers higher. Daimler AG (DAI), the maker of Mercedes trucks, limousines and sports cars, increased 1.7 percent to 36.21 euros.

Lanxess AG (LXS), the chemicals maker spun off from Bayer AG in 2005, gained 6.2 percent to 42.27 euros after the shares lost 5.8 percent on Aug. 26 because Chief Executive Officer Axel Heitmann sold stock worth 9.88 million euros.

ProSiebenSat.1 Media AG (PSM) soared 6.9 percent to 12.63 euros after the German broadcasting group said it will buy back shares.

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.