German Stocks Climb to Seven-Month High as Lenders Rise
Deutsche Bank AG (DBK) and Commerzbank AG (CBK), Germany’s two largest lenders, added more than 2.5 percent. EON AG, the country’s biggest utility, soared 7 percent after reporting 2011 earnings that topped analysts’ estimates.
The DAX Index advanced 1.2 percent to 7,079.42 at the close in Frankfurt, its highest level since July 29 and its longest streak of daily gains since October. The benchmark measure has rallied 20 percent this year as the European Central Bank lent regional financial institutions more than 1 trillion euros ($1.3 trillion) for three years and U.S. economic reports beat estimates. The broader HDAX Index added 1 percent today.
“Valuation is the main driver,” said Juergen Meyer, a fund manager with SEB Asset Management in Frankfurt. “German (DAX) stocks fell 20-30 percent last year just because of the debt crisis, which was completely unwarranted. If the DAX crosses above 10,000 it will still not be overvalued.”
The Federal Open Market Committee said late yesterday that strains in global financial markets have eased and the labor market is gathering strength.
“The unemployment rate has declined notably in recent months, but remains elevated,” the policy makers said in a statement at the conclusion of their meeting in Washington. “Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook.”
The volume of shares changing hands on the DAX was 21 percent higher than the 30-day average, according to data compiled by Bloomberg.
U.S. Stress Tests
Deutsche Bank rose 3.4 percent to 38.17 euros, while Commerzbank gained 2.6 percent to 1.94 euros as lenders contributed the most to the Stoxx Europe 600 Index (SXXP)’s advance. In a separate statement, the U.S. central bank said that 15 of the nation’s largest 19 banks would maintain adequate capital levels even in a recession scenario.
Chancellor Angela Merkel’s Cabinet backed a bill to approve the euro-area’s permanent rescue fund, the European Stability Mechanism. Ministers meeting in Berlin today supported the planned 500 billion-euro ESM, which will start in July.
Merkel said that European efforts to resolve the debt crisis have made progress, even as “imbalances” in euro-area economies show that the task remains incomplete.
Merkel’s ‘Mountain Path’
“We’ve come a good way along the mountain path, but we’re not completely over the mountain,” Merkel told reporters in Rome late yesterday after talks with Italy’s Prime Minister Mario Monti. “I suspect that in the next few years there will continue to be new mountains -- there won’t be a celebratory event in which we say we’re over the mountain and now we can sit among the trees and say that we’ve done it.”
EON surged 7 percent to 18.28 euros after posting full-year underlying net income of almost 2.5 billion euros. That beat the 2.33 billion-euro median estimate of 26 analysts surveyed by Bloomberg. The utility predicted profit of 2.3 billion to 2.7 billion euros in 2012.
Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, gained 3.8 percent to 73.45 euros.
Volkswagen AG (VOW), the German carmaker which owns stakes in truckmakers Scania AB and MAN SE, advanced 3.1 percent to 141.90 euros after saying that commercial-vehicle sales surged 22 percent in 2011. Volkswagen’s commercial-vehicle unit predicted that its sales in Europe in 2012 will match its revenue from the region in 2011.
Wacker Chemie, Symrise
Wacker Chemie AG (WCH), the second-largest maker of solar-grade silicon, declined 3.8 percent to 69.18 euros as the company said that demand for polysilicon dropped in the fourth quarter of 2011. Wacker also said some customers withdrew from the solar business, terminating their agreements with the company.
Symrise AG (SY1), the German maker of ingredients for Dior’s Fahrenheit, slid 5.7 percent to 21.16 euros. Equinet AG cut the stock to hold from accumulate.
Amadeus Fire AG (AAD) soared 8.4 percent to 35.97 euros after the German employment service company proposed the biggest dividend in the company’s history.
Frankfurt-based Amadeus Fire climbed to its highest price in more than a year after announcing a plan to increase its dividend payout by 70 percent to 2.84 euros a share, beating the 1.96-euro estimate in a Bloomberg poll.
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