German Stocks Rise as Euro PMI, U.S. Jobs Data Surprise

German stocks rose as reports showed euro-area manufacturing and services contracted at a slower pace in January, and American jobless claims fell to a five-year low, offsetting Apple Inc.’s slowest profit growth since 2003.

Henkel AG advanced 2.1 percent after Berenberg Bank AG reiterated its buy recommendation for the chemical company. Deutsche Bank AG and Commerzbank (CBK) AG gained at least 1.5 percent. Dialog Semiconductor Plc (DLG) fell 2.6 percent.

The DAX Index (DAX) climbed 0.5 percent to 7,748.13 at the close of trading in Frankfurt. The benchmark has gained 1.8 percent so far this year as U.S. lawmakers agreed on a compromise budget and American companies reported better-than-expected earnings. The broader HDAX Index also added 0.5 percent today.

“The pace of the contraction in Europe is decelerating,” Henrik Drusebjerg a senior strategist at Nordea Bank AB in Copenhagen, where he helps oversee $220 billion, said in a telephone interview. “We have fairly good numbers from the U.S. Investors are more and more sure that we are in a modest risk-on environment and as long as this data carries on, we should see this continue. Even though Apple (AAPL) disappointed last night, we are seeing fairly good results. Overall, there is support for more risky assets without being overly optimistic.”

The volume of shares changing hands in companies listed on the equity benchmark was 14 percent more than the average of the last 30 days, according to data compiled by Bloomberg.

Euro PMI

Euro-area services and manufacturing output contracted at a slower pace this month than economists had estimated. A composite index based on a survey of purchasing managers in both industries rose to 48.2 from 47.2 in December, London-based Markit Economics said today. Economists had forecast a reading of 47.5, according to the median of 22 estimates in a Bloomberg News survey. A reading below 50 indicates contraction.

Claims for jobless benefits in the U.S. unexpectedly dropped last week to a five-year low. Applications for unemployment insurance payments decreased by 5,000 to 330,000 in the week ended Jan. 19, the Labor Department reported today.

U.S. lawmakers voted to temporarily suspend the nation’s borrowing limit late yesterday, removing the debt ceiling for now as a tool for seeking deeper spending cuts. The measure, passed 285-144, lifts the government’s $16.4 trillion borrowing limit until May 19. It now goes to the Senate, where Majority Leader Harry Reid said lawmakers will pass the bill unchanged and send it to President Barack Obama.

Apple Slows

Apple, the world’s most valuable company, reported the slowest profit growth since 2003 and the weakest sales increase in 14 quarters, as higher costs and rising competition make it harder to sustain revenue expansion.

Henkel, the Dusseldorf-based maker of Persil detergent, gained 2.1 percent to 63.72 euros after Berenberg confirmed its buy recommendation for the chemical company.

“Henkel is the one household & personal care stock to own,” Seth Peterson and Andrew Steele, analysts at Berenberg, wrote in a note today. “There are many good European HPC firms, but none offers the same combination of value, growth and peace of mind. Investors should feel reassured, rather than disappointed, that management’s 2016 growth strategy represents ‘more of the same.’”

Deutsche Bank, Germany’s biggest lender, rose 2.6 percent to 36.33 euros as a measure of banking stocks performed the best of 19 industry groups on the Stoxx Europe 600 Index.

Commerzbank added 1.5 percent to 1.65 euros. Germany’s second-biggest bank will cut 4,000 to 6,000 jobs over the next four years to reduce costs and meet its profit goals.

The job reductions will apply to all units worldwide with the retail bank having “significant overcapacity,” according to an internal memo obtained by Bloomberg news, the contents of which were confirmed by spokesman Simon Steiner in Frankfurt.

Deutsche Boerse

Deutsche Boerse AG (DB1) gained 2.4 percent to 48.96 euro, its highest price since April. The operator of the Frankfurt stock exchange plans a new round of cost cuts as it attempts to shore up profits in the face of declining trading volumes, according to two people familiar with the plans.

Details of the program are not yet final, said the people, who asked not to be identified as the discussions are private. A spokesman for Deutsche Boerse declined to comment.

Dialog Semiconductor, which makes chips used in Apple’s iPhone, fell 2.6 percent to 14.18 euros.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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

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