German Stocks Climb as DAX Extends Record on U.S. Talks

German stocks rose for the third time in four days, with the DAX Index (DAX) extending a record, as U.S. Senate leaders moved closer to a deal to end a partial government shutdown and avoid a breach of the debt limit.

Bayerische Motoren Werke AG (BMW) advanced 1.7 percent after Sanford C. Bernstein & Co. raised its price estimate for the stock by 11 percent. Axel Springer AG (SPR), Europe’s biggest newspaper publisher, climbed 2.4 percent as Commerzbank AG upgraded its recommendation. Bauer AG (B5A) added 3.7 percent after Goldman Sachs Group Inc. advised investors to buy the shares.

The DAX Index gained 0.5 percent to 8,770.78 at 10:11 a.m. in Frankfurt. The benchmark gauge has rallied 2 percent so far this month, extending its 2013 gains to 15 percent, amid optimism that American Congress will resolve the fiscal impasse and Janet Yellen, nominated to head the Federal Reserve, won’t rush to withdraw stimulus. The broader HDAX Index also increased 0.6 percent today.

“Markets are anticipating a last-minute solution to the budget discussions in the U.S.,” Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in a note. “Within the next two days the fiscal cliff discussions have to be decided and markets look like they are expecting a happy ending.”

U.S. Senate leaders may reach a deal as early as today to fund the government through Jan. 15, 2014, and extend its borrowing authority until Feb. 7, according to a person familiar with the negotiations who spoke on condition of anonymity. Democrat Harry Reid, the Senate majority leader, said he made progress in budget talks with his Republican counterpart, Mitch McConnell, even as the partial government shutdown entered its 15th day.

Two Hurdles

Any agreement would still have to be approved by both chambers of Congress, overcoming stalling maneuvers in the Senate and Republican resistance in the House of Representatives.

Without legislative action, the government would exhaust its borrowing powers on Thursday. The Treasury would start missing debt payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

Germany’s ZEW Center for European Economic Research may say today that its index of investor and analyst expectations, which aims to predict economic developments six months in advance, held this month at the highest level since April 2010, according to the median of analyst estimates compiled by Bloomberg.

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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