German Stocks Pare Worst Month in Nine Years on Fed Speculation

German stocks advanced, with the benchmark DAX Index trimming its biggest monthly drop in almost nine years, as unemployment fell and Federal Reserve minutes showed some policy makers wanted to add to stimulus measures.

Allianz SE (ALV) gained 5.3 percent as Goldman Sachs Group Inc. recommended buying shares of Europe’s biggest insurer by market value. ThyssenKrupp AG (TKA) and Salzgitter AG (SZG), Germany’s largest steelmakers, rallied with metal prices. Deutsche Telekom AG (DTE) slid the most in a year as the U.S. sued to block AT&T Inc.’s proposed $39 billion purchase of its T-Mobile USA Inc. unit.

The DAX rose 2.5 percent to 5,784.85 at the 5:30 p.m. close in Frankfurt. The gauge still tumbled 19 percent in August, its biggest monthly retreat since September 2002, as European and U.S. economic reports that trailed forecasts added to concern that the global economic recovery is at risk. The broader HDAX gained 2.6 percent today.

“There’s hope politicians will put in place measures to help the economy and the Fed will do the same,” said Markus Huber, head of German sales trading at ETX Capital in London. “The German data are certainly a surprise and should support German economic growth in the third quarter.”

German unemployment declined in August for a 26th straight month. The number of people out of work fell a seasonally adjusted 8,000 to 2.95 million and the jobless rate held at 7 percent, the lowest since records for a reunified Germany began in 1991, the Nuremberg-based Federal Labor Agency said today.

Retail Sales

A separate report showed German retail sales unexpectedly held steady in July after surging the most in more than three years the previous month. Sales, adjusted for inflation and seasonal swings, were unchanged from June, when they jumped 4.5 percent, the Federal Statistics Office in Wiesbaden said. Economists had forecast a 1.5 percent decline, the median of 20 estimates in a Bloomberg survey showed.

U.S. Federal Reserve policy makers debated ways to invigorate the recovery and hiring this month, potentially laying the groundwork for fresh action at their next gathering in September, according to minutes of their latest meeting released late yesterday. A few members of the Federal Open Market Committee favored a “more substantial move” at the Aug. 9 meeting beyond the pledge adopted by the panel to hold rates at record lows for the next two years.

U.S. Economy

German stocks extended gains as orders placed with U.S. factories rose in July by the most in four months. The 2.4 percent increase in bookings was more than the median forecast of economists in a Bloomberg News survey and followed a revised 0.4 percent drop in the prior month, Commerce Department figures showed.

Allianz advanced 5.3 percent to 71.73 euros as Goldman Sachs upgraded the stock to “buy” from “neutral.”

“Allianz has been sold off on what we see as excessive concerns over the sustainability of life earnings owing to the fall in German 10-year yields,” Goldman Sachs analysts, including Vinit Malhotra and Kent Choi, wrote in a report. “The Allianz German life spread is secure given the investment mix. Underlying profitability in non-life businesses is improving, both in mature and faster-growth markets.”

ThyssenKrupp climbed 4.7 percent to 23.51 euros, while Salzgitter gained 4.8 percent to 43.28 euros as aluminum, copper, lead, nickel, tin and zinc all rallied on the London Metal Exchange.

Deutsche Lufthansa AG advanced 5.7 percent to 11.80 euros. Europe’s second-biggest airline will lift business-class fares by 60 euros ($87) on long-haul routes from tomorrow and boost prices by as much as 40 euros in coach, spokesman Boris Ogursky said by phone.

Continental Climbs

Schaeffler Group, the roller-bearing maker that controls Continental AG (CON), said first-half profit rose 20 percent as higher demand for carmakers boosted sales. Continental shares surged 4.9 percent to 51.37 euros.

ElringKlinger AG (ZIL2) soared 8 percent to 17.71 euros, the biggest rally in seven weeks. The automobile-parts maker expects a one-time operating profit gain of 22 million euros this year from the sale of its Ludwigsburg industrial park after signing an agreement yesterday, it said.

TUI AG (TUI1) rose 4.3 percent to 4.78 euros, the highest in two weeks. The company is planning to consolidate its online businesses and move the unit to Berlin from Hanover, Reuters reported, citing Germany unit head Volker Boettcher.

Online Rivals

The German travel company is trying to catch up with rivals such as Expedia Inc. and Opodo as only 15 percent of TUI’s customers book online compared with an industry average of 24 percent, Reuters said.

Deutsche Telekom sank 7.6 percent to 8.81 euros, limiting gains in the DAX. (DAX) In a complaint filed today in federal court in Washington, the U.S. is seeking a declaration that Dallas-based AT&T’s takeover of T-Mobile, a unit of Deutsche Telekom, would violate U.S. antitrust law.

Bijou Brigitte Modische Accessoires AG dropped 2.7 percent to 63.40 euros as the retailer said first-half net income fell to 18.8 million euros from 24.5 million euros in the year-ago quarter.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

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

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