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Banks Lead Longest Czech Stock Rally in Four Years: Prague Mover

Czech shares climbed for a seventh day, the longest rally in almost four years, as Erste Group Bank AG, Komercni Banka AS and New World Resources Plc jumped after business confidence in Germany improved.

The PX gauge of 13 equities rose 1 percent to 1,041.29 in Prague, the highest close in more than 15 months and the longest stretch of gains since March 2009. Austria’s Erste, which has a 28 percent weighting in the index, added 1 percent.

Lenders led gains for European stocks on optimism U.S. lawmakers will reach a budget agreement and after Standard & Poor’s raised Greece’s credit rating. The Ifo institute’s business climate index for Europe’s biggest economy increased to 102.4 in December from 101.4 a month earlier, it said today.

“Germany’s Ifo index was a positive surprise,” Josef Nemy, an analyst at Komercni Banka in Prague, wrote in a report to clients today. The PX index’s “seventh day of straight gains was fueled mainly by financial stocks, which benefited from a good mood in western European markets,” he said.

CEZ AS, the country’s biggest utility, rose 0.4 percent after Goldman Sachs Group Inc. recommended buying the shares. The U.S. bank raised its recommendation from neutral in a report to clients dated yesterday, citing expectations for a rebound in electricity prices and planned sales of CEZ’s unit in Albania and a coal-fired plant in the Czech Republic.

‘Generally Supportive’

“We expect further clarity on these issues over the next month and expect this visibility to be generally supportive for the shares,” Deborah Wilkens, an analyst at Goldman in London, said in the report. “CEZ stands out in a sector context owing to its solid balance sheet and exposure to the German power market, which we forecast to improve medium term.”

Losses from CEZ’s investment in Albania may be lower than Moody’s Investors Service’s estimate last month for write-offs of as much as 202 million euros ($268 million), Chief Executive Officer Daniel Benes said in an interview published today by Hospodarske Noviny. CEZ seeks to leave the Balkan country to “minimize potential losses,” he told the newspaper.

“Benes’s comment about Albania may be taken as slightly positive,” Marek Hatlapatka, an analyst at Cyrrus brokerage in Brno, Czech Republic, wrote in a report to clients today.

New World Resources, the biggest Czech producer of coking coal, surged 5.5 percent to 95.50 koruna, its highest in almost four months. Europe’s benchmark coal contracts had their longest gaining streak in five months in the Netherlands, rising for a fifth day to $96.75 a metric ton.

NWR was the best performer in the PX index today, and the most traded stock, with turnover at three-times its daily average over the past three months.

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