German stocks advanced, with the benchmark DAX Index erasing a weekly decline, amid speculation euro-area governments may deploy as much as $1.3 trillion to fight the region’s debt crisis.
Deutsche Bank AG and Commerzbank AG followed a rally in European banking shares. Steelmakers ThyssenKrupp AG and Salzgitter AG rose with metal prices. Daimler AG and MAN SE climbed more than 3.5 percent.
The DAX advanced 3.6 percent to 5,970.96 at the close in Frankfurt, bringing this week’s gain to 0.1 percent. The gauge has still fallen 21 percent from this year’s high on May 2 amid concern global economic growth is slowing and policy makers are struggling to contain Europe’s debt crisis. The broader HDAX Index climbed 3.4 percent today.
“Financial markets worldwide remain almost exclusively governed by efforts to fight Europe’s debt crisis,” said Ansgar Krekeler, a sales analyst at WGZ-Bank AG in Dusseldorf, Germany. “What will come out of government leader meetings is still open. We recommend having a neutral position on the DAX.”
Negotiations on combining the euro area’s temporary and planned permanent rescue funds from mid-2012, while scrapping a ceiling on bailout spending, accelerated this week after efforts to leverage the temporary fund ran into European Central Bank opposition and provoked the French-German clash, two people familiar with the discussions said. They declined to be identified because political leaders will have to decide.
Finance ministers met in Brussels today to lay the groundwork for an Oct. 23 meeting of government leaders. A summit for Oct. 26 was set yesterday after Germany and France said the European Union needs more time to seal a “global and ambitious” accord.
German stocks gained even as a report showed the country’s business confidence fell to a 16-month low in October. The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, dropped to 106.4, the lowest reading since June 2010, from 107.4 in September. Economists had predicted a decline to 106.2, according to the median forecast of 42 economists in a Bloomberg News survey.
Deutsche Bank and Commerzbank, Germany’s biggest banks, gained 6.9 percent to 27.83 euros and 7.4 percent to 1.70 euros, respectively. Lenders posted the third-best performance among 19 industry groups in the benchmark Stoxx Europe 600 Index today, rising 3.8 percent.
ThyssenKrupp and Salzgitter, Germany’s largest steelmakers, climbed 3.5 percent to 19.96 euros and 3 percent to 38.57 euros, respectively, as copper, lead, nickel, tin and zinc all advanced on the London Metal Exchange.
Daimler, the world’s third-biggest maker of luxury cars, added 5 percent to 36.72 euros, its first advance this week. MAN, the truckmaker that Volkswagen AG is seeking to control, rose 3.7 percent to 59.70 euros.