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German Stocks Post Their Biggest Weekly Advance in Three Years

German stocks climbed, with the benchmark DAX Index posting its biggest weekly advance in three years, after a report showed unemployment in the U.S. unexpectedly dropped in November.

Deutsche Bank AG and Commerzbank AG, the country’s largest lenders, led gains, rising more than 5 percent. Daimler AG climbed 3.1 percent, while Salzgitter AG, Germany’s second-largest steelmaker, rose 1.4 percent.

The DAX Index added 0.7 percent to 6,080.68 in Frankfurt, for an 11 percent weekly jump, its biggest rally since November 2008. The gauge rose this week as the European Central Bank and five other central banks lowered the cost of dollar funding, China cut its reserve-requirement ratio for banks and U.S. consumer confidence unexpectedly rose in November. The broader HDAX Index climbed 0.8 percent today.

“It’s very good news and it’s encouraging,” Yves Marcais, a sales trader at Global Equities in Paris, said on the U.S. jobs report. “We have the feeling the U.S. economy is more solid than expected.”

The jobless rate declined to 8.6 percent, the lowest since March 2009, from 9 percent, a Labor Department release showed today. Payrolls climbed 120,000, with more than half of the hiring coming from retailers and temporary-help agencies, after a revised 100,000 gain in October. The median forecast in a Bloomberg News survey called for an increase of 125,000.

Closer Fiscal Union

In Europe, Germany and France are pushing for closer economic ties among euro-area nations and tougher enforcement of budget rules to counter the debt crisis.

German Chancellor Angela Merkel repeated her wish to rework European Union rules to lock in budget monitoring and seal off the European Central Bank from political interference. French President Nicolas Sarkozy late yesterday called for “more discipline” and automatic penalties for nations that break fiscal rules.

Merkel told the lower house of parliament today that overcoming the euro region’s sovereign-debt crisis “is a process and this process will take years.”

“The government has always made it clear that the debt crisis can’t be solved at a single stroke and there are no easy and fast solutions,” Merkel said. She also said issuance of common euro bonds is “unthinkable” while governments retain national control over budgets.

Deutsche Bank, Commerzbank

Financial shares paced gains, with Deutsche Bank rising 5.1 percent to 30.08 euros and Allianz SE, Europe’s biggest insurer, gaining 3.2 percent to 78.72 euros. Munich Re, the world’s largest reinsurer, added 1.9 percent to 94.82 euros.

Commerzbank jumped 11 percent to 1.50 euros. The bank will introduce a plan to shore up its capital without state aid, Die Welt newspaper said, citing banking officials.

Frankfurt-based Commerzbank could generate 1 billion euros ($1.4 billion) by retaining profit through June 30 and boosting its core capital by 3 billion euros by selling 30 billion euros in risk-weighted assets, the newspaper said, citing options that the supervisory board will discuss today.

Daimler climbed 1.7 percent to 34.93 euros. The carmaker plans to cut production costs by 10 percent annually in 2012 and 2013, Reuters reported, citing Wolfgang Nieke, a works council member.

Salzgitter rose 1.4 percent to 39.89 euros after WestLB raised the company’s shares to “buy” from “add.”

Celesio AG surged 5.5 percent to 12.10 euros. The stock was raised to “equal weight” from “underweight” at Morgan Stanley.

Vossloh AG gained 2.3 percent to 77.09 euros after the company confirmed its forecast for 2011.

ThyssenKrupp AG dropped 6.4 percent to 17.80 euros after Germany’s largest steelmaker posted a fiscal full-year loss because of 2.9 billion euros of impairments charges, mostly after the construction of a plant in Brazil was delayed. ThyssenKrupp posted a loss before interest and taxes of 988 million euros in the year ended Sept. 30, compared with a 1.4 billion-euro profit a year earlier.

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