Breaking News

Tweet TWEET

German Stocks Advance as Euro-Area Confidence Improves

German stocks advanced as a report showed euro-area consumer confidence increased more in August than estimated, outweighing worse-than-forecast U.S. home sales.

Commerzbank AG gained for a third day on speculation the German government may sell its 17 percent stake in the lender. GSW Immobilien AG (GIB) slipped 0.9 percent after HSBC Holdings Plc downgraded its rating on Berlin’s largest residential landlord.

The DAX Index (DAX) added 0.2 percent to 8,416.99 at the close of trading in Frankfurt, for a weekly gain of 0.3 percent. The benchmark index has traded within a 2.3 percent range since July 17 as volumes fell and investors awaited more economic reports to assess the strength of the economy. The broader HDAX Index rose 0.3 percent today.

“We are buyers of European equities because they were oversold,” said London-based Nick Lyster, who helps oversee $292 billion as chief executive officer in Europe for Principal Global Investors. “While we are not expecting any fireworks, the economy in Europe is a lot better than it was.”

The DAX has rallied 9.4 percent from its low on June 24 as the European Central Bank said that interest rates will remain low for an extended period and manufacturing and gross domestic product data in the country beat estimates.

The volume of shares changing hands in DAX-listed companies was 24 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.

Euro-area consumer confidence increased more in August than economists estimated. An index of household confidence improved for a ninth month to minus 15.6, the highest level since July 2011, from minus 17.4 in the previous month, the European Commission said in a preliminary report. Economists had forecast an increase to minus 16.5, according to the median of 26 estimates in a Bloomberg News survey.

U.S. Homes

Purchases of new U.S. homes plunged in July by the most in more than three years and previous months were revised down. Sales of newly built homes declined 13.4 percent to a 394,000 annualized pace, the weakest since October, following a 455,000 rate in the prior period that was lower than previously estimated, Commerce Department figures showed today in Washington. The median estimate of 74 economists surveyed by Bloomberg called for a decrease to 487,000.

German gross domestic product climbed 0.7 percent in the second quarter, the Federal Statistics Office in Wiesbaden said today, confirming an Aug. 14 estimate. The economy grew 0.5 percent from a year earlier when adjusted for working days.

Commerzbank Gains

Commerzbank advanced 2.6 percent to 8.83 euros as analysts said the German government may be preparing to dispose of its stake in the country’s second-largest lender.

“We think that it is true that the German government is considering various options to sell its Commerzbank stake,” Equinet AG wrote in a report today. “In our view, CBK’s core bank would be clearly interesting for foreign banks that are interested in entering the German market.”

Lanxess AG rose 1.1 percent to 48.94 euros and BASF AG added 1.1 percent to 69.03 euros. A gauge of chemical-related companies advanced on the Stoxx Europe 600 Index.

GSW slipped 0.9 percent to 33.13 euros. HSBC cut the shares to underweight, similar to a sell rating, from neutral, saying they are worth 31.8 euros apiece. GSW surged to the highest price since its 2011 initial public offering on Aug. 20 after Deutsche Wohnen AG made an all-share bid for the company that would create the second-largest owner of German homes.

To contact the reporters on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.