German stocks advanced for a second day, extending a three-week high, as U.S. Speaker of the House John Boehner said he is “optimistic” budget talks with President Barack Obama will continue.
Bayer AG (BAYN), the maker of drugs and chemicals, gained 1 percent. Continental AG added 1.4 percent. ThyssenKrupp AG (TKA) slid 2.5 percent after a report that it may get as little as 1 billion euros ($1.29 billion) from the sale of its Steel Americas unit.
The DAX Index (DAX) added 0.2 percent to 7,343.41 at the close of trading in Frankfurt, erasing an earlier decline. The equity benchmark has rallied 23 percent from this year’s low on June 5 as the European Central Bank approved an unlimited bond-buying program and euro-region finance ministers eased the terms of aid for Greece. The broader HDAX Index gained 0.1 percent today.
“Now that the Greek headlines are moving to the back burner, the U.S. fiscal-cliff debate is taking center stage,” Ion-Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Markets will remain hostage to a decision, with volatility rising for the next few weeks.”
The DAX earlier fell as much as 0.9 percent as Erskine Bowles, the co-chairman of Obama’s 2010 fiscal commission, said it’s unlikely the president and Congress will reach a deal by the end of this year.
Senate Majority Leader Harry Reid said Democrats and Republicans have made little progress in negotiations over how to avoid the so-called fiscal cliff at the end of the year.
Reid, speaking to reporters in Washington late yesterday, said that Republicans backed away from their earlier openness to considering new tax revenue as part of a deal to prevent $607 billion of budget changes. The Congressional Budget Office has said a failure to avoid the fiscal cliff could lead to a recession and a jobless rate of about 9 percent, compared with the October rate of 7.9 percent.
A report today showed sales of new U.S. houses unexpectedly declined in October. Sales dropped 0.3 percent to a 368,000 annual pace following a revised 369,000 rate in September. The median estimate of 74 economists surveyed by Bloomberg called for a 390,000 sales pace.
The volume of shares changing hands in DAX companies was 20 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
Bayer increased 1 percent to 70.05 euros, the highest level in six weeks.
Continental, Europe’s second-largest auto-parts maker, added 1.4 percent to 82.47 euros, a two-month high.
ThyssenKrupp dropped 2.5 percent to 15.62 euros. Germany’s largest steelmaker may get 2 billion euros to 4 billion euros for its Americas unit, and in the worst-case scenario, only 1 billion euros, Sueddeutsche said.
Celesio AG (CLS1) slumped 2.6 percent to 12.94 euros after Franz Haniel & Cie. GmbH sold 100 million euros of stock in the drug wholesaler. The closely held German investment company sold about 7.9 million shares at 12.60 euros apiece.
Metro AG (MEO) dropped 3.7 percent to 21.32 euros as Haniel said it will reduce its stake in Germany’s largest retailer to 30 percent from 34.2 percent within 18 months. Haniel also plans to raise about 150 million euros by selling non-strategic assets to help reduce net borrowing below 2 billion euros.
Deutsche Bank AG (DBK) fell 1.9 percent to 32.28 euros. Stephan Leithner, Deutsche Bank’s head of compliance, said the lender has set aside reserves for possible financial damages over banks’ alleged manipulation of London Interbank Offered Rate.
Separately, Deutsche Bank was sued by a trustee over claims that some securities sold by a unit of the bank were backed by home-mortgage loans taken out by fraudulent borrowers.
DB Structured Products Inc.’s pool of more than 1,500 mortgages included more than 320 that were defective, HSBC Bank USA, acting as trustee, said in a lawsuit filed yesterday in federal court in Manhattan.
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