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German Stocks Rise Amid Speculation of U.S. Stimulus

German stocks advanced to the highest in almost five years as investors awaited the Federal Reserve’s decisions on interest rates and economic stimulus, while U.S. lawmakers continued discussions on a new budget.

Allianz AG contributed the most to the DAX Index’s rise as Exane BNP Paribas raised its price estimate on the stock. ThyssenKrupp AG (TKA), Germany’s largest steelmaker, gained 3.8 percent as Jefferies Group Inc. upgraded its recommendation on the shares. Wacker Chemie AG (WCH) surged 12 percent after China announced a new round of solar-project subsidies.

The DAX added 0.3 percent to 7,614.79 at the close of trading in Frankfurt, its highest level since January 2008. The gauge has rallied 28 percent from its low on June 5 as European Central Bank policy makers agreed on an unlimited bond-purchase program and the Federal Reserve announced a third round of quantitative easing. The broader HDAX Index rose 0.3 percent.

“Close to the end of the year, markets seem to know only one direction -- further upwards,” Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in a note. “The technical situation is improving with some encouraging economic figures. It does not look like this trend will stop in the short term.”

The volume of shares changing hands on the DAX was 6.1 percent below the average of the last 30 days, according to data compiled by Bloomberg.

The Federal Open Market Committee, which began a two-day meeting yesterday, will announce its interest-rate decision at 12.30 p.m. in Washington, followed by forecasts on economic growth, unemployment and inflation.

Stimulus Optimism

The Fed will expand economic stimulus by announcing $45 billion in monthly Treasury purchases in addition to its program to buy $40 billion in mortgage bonds each month, according to a Bloomberg survey of economists.

President Barack Obama lowered his demand for tax increases to $1.4 trillion from $1.6 trillion in a bid to reach agreement on a budget to avoid more than $600 billion of automatic tax increases and spending cuts from coming into effect next year.

Still, Republicans in Congress hardened their resistance to Obama’s proposed higher taxes for top earners and called on him to propose spending cuts.

Obama’s budget plan is “mainly tax hikes,” House Speaker John Boehner told reporters today in Washington. “We’ve got some serious differences.”

Allianz rose 1 percent to 103.95 euros, contributing the most to the benchmark index’s gain, as Exane raised its target price for Europe’s biggest insurer by 12 percent to 125 euros. Exane kept its outperform rating, meaning investors should buy the stock.

ThyssenKrupp Gains

ThyssenKrupp advanced 3.8 percent to 17.83 euros. Jefferies raised the stock to buy from hold, saying that estimates for the steelmaker have become more realistic after it posted its second straight annual loss on a bigger-than-expected writedown of its Americas unit. Jefferies also increased its forecast price on the shares to 21 euros from 17.50 euros.

A gauge of commodity companies gained the most of the 19 industry groups in the Stoxx Europe 600 Index. (SXXP)

Wacker Chemie, a maker of the main raw material in solar panels, surged 12 percent to 48.61 euros, its biggest gain since April 2009, as China announced its second round of subsidies for solar projects this year.

Daimler AG (DAI) advanced 1 percent to 39.86 euros after the world’s third-largest maker of luxury vehicles appointed Hubertus Troska to its management board to revive sales growth in China as Mercedes-Benz loses ground to Volkswagen AG’s Audi.

Troska, 52, currently head of Daimler’s Mercedes trucks unit, will take over the new position to become Daimler’s eighth board member starting tomorrow, the Stuttgart, Germany-based carmaker said today in a statement.

Commerzbank AG, Germany’s second biggest lender, added 2.7 percent to 1.42.

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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