German stocks rallied the most in seven weeks as the nation’s investor confidence topped economists’ projections and Daimler AG raised its profit forecast for trucks and Mercedes-Benz cars.
Daimler, the world’s second-biggest maker of luxury cars, surged the most in 10 months. Bayerische Motoren Werke AG and Volkswagen AG followed Daimler higher. Air Berlin Plc and Lufthansa AG advanced as European airspace began to reopen after a volcanic eruption in Iceland forced flights to be grounded.
The DAX Index rose 1.7 percent to 6,264.23, the biggest increase since March 1. The gauge had declined for two straight days after the U.S. Securities and Exchange Commission said it was suing Goldman Sachs Group Inc. for fraud tied to collateralized debt obligations. The broader HDAX Index also gained 1.7 percent today.
“It’s mainly Daimler that is driving the market up today and it’s a really good kick-off to the earnings season in Germany,” said Michael Koehler, an equity strategist at Landesbank Baden-Wuerttemberg in Mainz. “Confidence was probably not that high among investors recently, especially with Goldman Sachs’s suit, but it seems to have changed today with Daimler’s preliminary earnings.”
German investor confidence rose for the first time in seven months in April as falling unemployment and a weaker euro improved the economic outlook. The Mannheim-based ZEW Center for European Economic Research said its index of investor and analyst expectations jumped to 53 from 44.5 in March. Economists had predicted a gain to 45.1, according to the median of 36 forecasts in a Bloomberg News survey.
The DAX has climbed 5.2 percent in 2010 as the European Union agreed a contingency rescue package to help Greece cut Europe’s biggest budget deficit and the U.S. Federal Reserve pledged to keep interest rates low for an extended period. Greece’s euro-region’s partners are committed to cover any short-term financing needs faced by the government and can quickly activate the package of emergency loans, Finance Minister George Papaconstantinou said today.
Daimler jumped 7.4 percent to 39 euros, the biggest surge since June. The Mercedes-Benz car division expects earnings before interest and tax of between 2.5 billion euros ($3.4 billion) and 3 billion euros from ongoing business this year. Daimler previously forecast more than 1.5 billion euros profit for the unit.
“With the dollar strengthening, product mix and sales recovering, we believe that this updated earnings guidance is a far better reflection of reality,” Deutsche Bank AG wrote in a report to clients today.
The carmaker reported preliminary Ebit including special items of 1.2 billion euros after a loss of 1.4 billion euros in the year-earlier period. That beat the median estimate of 668 million euros, according to five analysts surveyed by Bloomberg this month.
Daimler’s share-price estimate was lifted to 48 euros from 41 euros by Equinet AG and to 44 euros from 42 euros at Commerzbank AG. Commerzbank said Daimler’s “management is becoming braver,” in a report today.
BMW, the world’s biggest maker of luxury cars, surged 4.2 percent to 36.80 euros, while Volkswagen’s preferred shares advanced 3.6 percent to 72.50 euros.
Air Berlin rose 2.2 percent to 4.10 euros and Lufthansa, Europe’s second-biggest airline, rose 1.8 percent to 12.62 euros. European airspace that was closed by the volcanic eruption gradually reopened to flights today after transport ministers said planes could fly through thinner parts of the ash plume. Fraport AG, the operator of Frankfurt airport, gained 0.9 percent to 39.89 euros.
Salzgitter AG rose 2.1 percent to 67.78 euros. Germany’s second-largest steelmaker said blast furnaces of Western Europe’s steel industry are currently being run at between 85 percent and 90 percent of capacity. Johannes Nonn, a management board member at the German company, made the comments to reporters in Hanover today.
ThyssenKrupp AG, the country’s biggest steelmaker, advanced 0.8 percent to 25.82 euros as aluminum, copper, lead, nickel, tin and zinc all rose on the London Metal Exchange.
Lanxess AG climbed 5.9 percent to 34.92 euros as Germany’s largest publicly traded specialty chemicals maker said it’s expanding production capacity for high-technology plastics at its Wuxi site in China.
Delticom, Axel Springer
Delticom AG surged 4.6 percent to 37.03 euros, the highest level since the company first sold shares in 2006. The tire dealer said first-quarter revenue rose to 74 million euros from 51 million euros.
Axel Springer AG gained 5 percent to 93.20 euros. Europe’s biggest newspaper publisher said its first-quarter earnings before interest, taxes, depreciation and amortization rose 48 percent and boosted its full-year forecast.
MTU Aero Engines Holding AG advanced 2.8 percent to 43.31 euros as the engine maker said first-quarter net income rose 5 percent to 32.6 million euros.
United Internet AG climbed 1.2 percent to 12.23 euros as the German Web-access provider resolved to start a new share buyback after completing a repurchasing program.
Solar Millennium AG jumped 2.6 percent to 18.36 euros as the solar company said a 30 million-euro bond, issued in April 2005, has been repaid.
Bauer AG fell 2 percent to 34.50 euros after the construction company proposed a dividend of 60 euro cents a share for 2009, compared with 1 euro a year earlier. Berenberg Bank cut its recommendation on the stock to “hold” from “buy.”
Conergy AG lost 2.2 percent to 81.1 cents. The solar company postponed its planned May 26 shareholders meeting as refinancing talks with banks continue. A new date will be announced when the discussions are concluded, the company said.