German stocks advanced, with the benchmark DAX Index (DAX) snapping two days of declines, as European leaders prepared to tell Greece there is no alternative to budget cuts imposed in the bailout plan.
MAN SE rose 4.9 percent after it reiterated its sales forecast with all its divisions reporting higher third-quarter orders. Metro AG (MEO) added 1.4 percent amid speculation that Germany’s largest retailer may sell its Kaufhof unit. Hugo Boss AG (BOS) gained 1.2 percent as third-quarter net income rose.
The DAX advanced 2.3 percent to 5,965.63 at the close in Frankfurt. The gauge has still fallen 21 percent from this year’s high on May 2 amid concern global economic growth is slowing and policy makers are struggling to contain Europe’s debt crisis. The broader HDAX Index (HDAX) climbed 2.1 percent today.
The DAX fell 5 percent yesterday after Greece’s government called a referendum on its latest bailout package.
“The decline was immense and for many stocks it wasn’t justified,” said Pierre Mouton, a fund manager who helps oversee $7.5 billion at Notz Stucki & Cie. in Geneva. “The Greek story doesn’t make me very pessimistic. It’s a political maneuver.”
Euro-area leaders, racing to prevent their week-old debt crisis strategy from unraveling, are holding emergency talks today to tell Greece there is no alternative to the budget cuts imposed in the bailout plan.
Greek Prime Minister George Papandreou was summoned to Cannes, France, on the eve of a Group of 20 summit where he will hear from French President Nicolas Sarkozy that the “only way to resolve Greek debt problems” is through a deal hammered out last week in a six-day crisis-management marathon.
At the close of European trading today, U.S. Federal Reserve policy makers raised their assessment of the economy while saying “significant downside risks” remain and refrained from taking any additional steps to ease monetary policy.
“Economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year,” the Federal Open Market Committee said. At the same time, it repeated that “there are significant downside risks to the economic outlook, including strains in global financial markets.”
The Fed left unchanged its pledge to keep the benchmark interest rate near zero through at least mid-2013 as long as unemployment remains high and the inflation outlook stays “subdued.” The central bank has kept the target federal funds rate in a range of zero to 0.25 percent since December 2008.
MAN jumped 4.9 percent to 63.06 euros after the truck maker said advance sales contracts for the group, including the main commercial-vehicle division and diesel-engine and turbine units, increased 10 percent to 4.1 billion euros ($5.6 billion).
Metro rose 1.4 percent to 33.54 euros. Signa, an Austrian real-estate company backed by Greek billionaire George Economou, said it is in discussions with the German retailer, after Handelsblatt reported that it may buy Metro’s Kaufhof department-store unit.
Preferred shares of Hugo Boss, the luxury clothier controlled by buyout firm Permira Advisers, added 1.2 percent to 65.66 euros. The company said its third-quarter profit rose 29 percent as its expanded sales network in China propelled revenue growth.
GEA Group AG (G1A), an engineering services company, soared 6 percent to 20.50 euros. The company reported third-quarter profit that beat analyst estimates and confirmed its 2011 forecast.
Reports today showed German unemployment unexpectedly rose in October, for the first time in more than two years. The number of people out of work rose a seasonally adjusted 10,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said. Economists had forecast a decline of 10,000, the median of 31 estimates in a Bloomberg News survey showed. The adjusted jobless rate rose to 7 percent from 6.9 percent. A separate report showed factory output dropped.
To contact the editor responsible for this story: Andrew Rummer at firstname.lastname@example.org