German Stocks Fluctuate After Three-Day Rally; SAP, Merck Climb

German stocks fluctuated after a three-day rally pushed the benchmark DAX Index (DAX) to a four-week high, as investors awaited signs that policy makers are moving closer to a solution for Europe’s debt crisis.

Merck KGaA (MRK) and Henkel AG climbed more than 2 percent. SAP AG (SAP) rose after a Finanz und Wirtschaft report said that the software maker has a “very well-filled contract pipeline.” Dialog Semiconductor Plc (DLG) surged 6 percent after increasing its third-quarter sales forecast.

The DAX decreased 0.2 percent to 5,619.61 at 2:41 p.m. in Frankfurt, having earlier risen 1.3 percent. The gauge rallied the most since May 2010 yesterday and has climbed 11 percent from this year’s lowest level on Sept. 12 as investors speculated a 29 percent slump since June 30 wasn’t commensurate with the outlook for earnings.

“Policy makers around the world have urged their European counterparts to tackle the growing problems more decisively,” Kate Moore, a New York-based global equity strategist at Bank of America Corp.’s Merrill Lynch unit, wrote in a report. “Germany may be overconfident in the belief that the consequences of a Greek default can be contained.”

Merrill Lynch raised its tactical asset allocation stance on European stocks to “neutral” from “underweight,” saying valuations are supportive while there is continued “event risk” related to the European debt crisis.

Europe Bail-Out

The tumble in stocks had left the DAX trading at 8.8 times estimated profits, below the average price-earnings ratio of 12.3 during the past five years, according to data compiled by Bloomberg.

German Finance Minister Wolfgang Schaeuble yesterday declined to rule out further changes to the euro rescue fund known as the European Financial Stability Facility, saying that if we “have to enhance the EFSF” it will be done in the “most efficient way.” At the same time, he said that increasing the size of the fund would damage the AAA rating of some euro-area members.

The Financial Times reported late yesterday that some euro- area countries are demanding private creditors take bigger writedowns on their Greek bond holdings.

Henkel, Merck, SAP

Preferred shares of Henkel, the maker of Loctite glues and Persil detergent, gained 2.1 percent to 41.16 euros. Drugmaker Merck rose 2.2 percent to 62.06 euros.

SAP advanced 2.1 percent to 38.64 euros, the highest price in seven weeks. The software maker has a “very well-filled contract pipeline” and “good results” will continue even as global economic growth is slowing, Finanz und Wirtschaft reported, citing an interview with Robert Enslin, head of global sales.

Dialog Semiconductor jumped 6.1 percent to 14.43 euros. The supplier of analog and digital circuits now predicts third- quarter sales of $137 million to $140 million, the company said in a statement. The previous forecast was for revenue of $131 million to $136 million.

Heidelberger Druckmaschinen AG (HDD) climbed 2.4 percent to 1.61 euros as HSBC Holdings Plc upgraded the maker of printing presses to “neutral” from “underweight.”

Deutsche Boerse AG (DB1), the operator of the Frankfurt exchange, declined 4.3 percent to 39.53 euros as European Commission President Jose Barroso said the commission adopted a proposal for introducing a financial-transaction tax.

Q-Cells SE (QCE), a solar-cell and module maker, slid 3.7 percent to 54.2 euro cents, while competitor Solarworld AG (SWV) retreated 4.8 percent to 3.37 euros. Germany, the world’s biggest solar market, added 664 megawatts of panels in June, a 69 percent drop from the same period last year, according to preliminary figures released by the German power grid regulator Bundesnetzagentur.

To contact the reporter on this story: Adam Haigh in London at

To contact the editor responsible for this story: Andrew Rummer at

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