German Stocks Advance as Confidence Exceeds Forecasts

(Corrects the spelling of the name in the fourth paragraph of the story published on Nov. 22)

German stocks climbed, extending a weekly gain, after a report showed business confidence this month in Europe’s largest economy increased more than forecast.

TUI AG rose 1.2 percent as Norwegian billionaire John Fredriksen increased his stake in the travel company. Merck KGaA (MRK) advanced as Commerzbank advised investors to add to their holdings of the cancer-drug maker. EON SE, the country’s largest utility, fell as Kepler Cheuvreux and Commerzbank AG reduced their ratings on the shares.

The DAX Index (DAX) added 0.3 percent to 9,219.04 at the close of trading in Frankfurt. The benchmark has surged 21 percent in 2013 as central banks around the world pledged to leave interest rates low for a prolonged period. The gauge, which rose 0.6 percent this week, is trading at 13.7 times its members’ projected earnings, near the highest valuation since 2009. The broader HDAX Index (HDAX) also gained 0.3 percent today.

“Our view is pretty much that the ingredients for the markets to see higher levels are still very much in place,” said Ashish Misra, who helps oversee $18 billion at Lloyds Bank Private Banking in London. “There is still value in equities and we’re seeing growth in many parts of the world.”

German business confidence surged to the highest in more than 1 1/2 years in November. The Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 109.3 from 107.4 in October. Economists forecast a gain to 107.7, according to the median of 43 estimates in a Bloomberg News survey.

Debt Overhang

ECB governing council member Peter Praet said at a conference in Paris that Europe has a debt overhang problem that needs to be addressed “forcefully.” Policy makers have already lost time in tackling it, he said. His colleague in the council and Bank of Austria governor, Ewald Otto Nowotny, said the regional economy has too little demand and fixing the banking system alone isn’t enough to end the crisis.

TUI rose 1.2 percent to 10.44 euros, its highest price since February 2011. Fredriksen sold his stake in TUI Travel Plc to buy more stock in German parent company TUI. Fredriksen’s Monteray Enterprises Ltd. said it will acquire from Goldman Sachs Group Inc. 8 million shares of TUI, or 3.2 percent of the Hanover-based company’s share capital.

Merck advanced 0.7 percent to 126.90 euros. Commerzbank increased its rating on the drugmaker to hold from reduce, citing the possibility of the management buying other companies next year.

Continental Rises

Continental AG (CON) advanced 2.2 percent to 150.35 euros, its highest price since at least 1992. The maker of car parts has brought forward a sales target for driver-assist systems to 2016 from 2020, Handelsblatt reported, quoting an interview with new chassis & safety division head Frank Jourdan.

EON dropped 0.5 percent to 14.02 euros, paring earlier losses of as much as 2.9 percent. Commerzbank cut the utility to reduce, similar to a sell recommendation, citing a difficult market in the medium term. Kepler also downgraded EON to reduce. Both Commerzbank and Kepler said its earnings outlook doesn’t justify the share-price gain since July. EON rose 18 percent from July 5 to the close of trading yesterday.

Rhoen-Klinikum AG fell 3.3 percent to 20.45 euros. B. Braun Melsungen AG, which holds a 10.98 percent stake in the company, asked a German court to void the sale of clinics or rule it needs 90 percent shareholder support, Rhoen-Klinikum said. In September, Fresenius SE’s Helios unit agreed to pay Rhoen-Klinikum 3.07 billion euros ($4.2 billion) for 43 German clinics, a deal that would create Europe’s largest chain of private hospitals.

Suedzucker AG (SZU) plunged 7.9 percent to 19.15 euros, extending yesterday’s 9.2 percent drop, for the worst two-day loss since at least 1998. The sugar producer yesterday said that earnings will not match expectations. Commerzbank advised investors today to sell the shares.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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