German Stocks Advance; Investors Await Stimulus Measures

German stocks advanced amid investor speculation of further central bank stimulus measures to boost the global economy as a report in China added to signs of an economic slowdown.

Fresenius SE rose 2.4 percent after it decided against reviving a bid for Rhoen-Klinikum AG. (RHK) SAP AG (SAP) added 1.2 percent. Volkswagen AG (VOW) dropped 2.1 percent after saying the coming months will be more difficult.

The DAX Index (DAX) gained 0.6 percent to 7,014.83 at the close of trading in Frankfurt. The measure has rallied 18 percent from this year’s low on June 5 as European Central Bank President Mario Draghi said he would do everything possible to preserve the euro. The broader HDAX Index also added 0.6 percent today.

“China data weaker yet again boosts anticipation that we will see more action from Beijing to boost the economy,” said Chris Beauchamp, a market analyst at IG Index in London. “People are still broadly positive about the ECB meeting this week and believe Draghi will look to take measures to ease the crisis.”

The ECB holds its regular policy meeting on Sept. 6, where Draghi may also unveil details of a new bond-purchase program.

A Chinese government survey released on Sept. 1. showed factory output unexpectedly shrank for the first time in nine months in August while separate data from the Australian Bureau of Statistics today showed retail sales fell in July by the most in almost two years.

Euro-area manufacturing contracted more than initially estimated in August, suggesting the economy may struggle to avoid a recession in the third quarter.

A gauge of manufacturing in the 17-nation euro area rose to 45.1 last month from 44 in July, London-based Markit Economics said today. It had previously reported a reading of 45.3 for August, with a level below 50 indicating a contraction.

Schaeuble Warning

German Finance Minister Wolfgang Schaeuble warned against placing too much faith in the ECB’s bond-buying plans as pressure grows on Spain and Italy to decide whether to seek assistance to lower borrowing costs.

Whatever proposals Draghi announces on Sept. 6 must fall within the Frankfurt-based central bank’s mandate, Schaeuble said in an interview today on Deutschlandfunk radio. Germany won’t accept ECB financing of state budgets, he said.

“We have to be very careful that we don’t raise false expectations,” Schaeuble told the broadcaster in Berlin. “It has to remain very clear, state debt can’t be financed through monetary policy. Therefore we can’t have a decision -- we would think it very wrong -- that’s not covered by the ECB mandate.”

Fresenius Gains

Fresenius added 2.4 percent to 86.87 euros after Germany’s biggest operator of private hospitals decided against reviving its bid for its German competitor, capping more than four months of jockeying over the top spot in Germany’s hospital market.

Fresenius informed Rhoen-Klinikum that it doesn’t intend to submit a renewed offer “for the time being,” Bad Neustadt an der Saale-based Rhoen-Klinikum said in a statement to the stock exchange today. Rhoen-Klinikum plunged 21 percent to 14.99 euros, its biggest drop since at least 1998.

SAP, the world’s largest maker of business-management software, advanced 1.2 percent to 53.03 euros.

BASF SE, the world’s biggest chemical maker, climbed 1 percent to 62.44 euros. A gauge of companies in the chemical sector was among the best performers of the 19 industry groups on the Stoxx Europe 600 Index.

Hugo Boss AG (BOSS) gained 2 percent to 75 euros as Morgan Stanley reiterated an overweight rating on the stock.

Solarworld AG, the world’s fourth-largest solar-panel maker, jumped 7.4 percent to 1.17 euros.

Volkswagen fell 2.1 percent to 137.50 euros. Europe’s largest carmaker said a report in Automobilwoche saying it may cut production by about 10 percent this fall was “factually not correct” and the carmaker was “on track.” Still, a spokesman said the coming months will be more difficult.

According to the report, which didn’t say where it got the information, Volkswagen cited a possible economic slowdown as a reason for the cut-back.

Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, slipped 1.7 percent to 5.40 euros after the stock was cut to reduce from neutral by Nomura Holdings Inc.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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

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