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German Stocks Rise as Business Confidence Beats Forecasts

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Dec. 19 (Bloomberg) -- German stocks rose, with the benchmark DAX Index climbing to its highest in nearly five years as business confidence increased in December more than expected.

HeidelbergCement AG gained 4.9 percent as a gauge of construction companies advanced after Deutsche Bank AG reiterated its positive industry outlook. SAP AG rose after rival Oracle Corp. posted fiscal second-quarter sales and profit that exceeded analysts’ estimates. ThyssenKrupp AG advanced 2.4 percent as Credit Suisse Group AG upgraded the stock.

The DAX added 0.2 percent to 7,668.5 at the close of trading in Frankfurt, its highest level since January 2008. The gauge has rallied 28 percent from its low on June 5 as European Central Bank policy makers agreed on an unlimited bond-purchase program and the Federal Reserve announced a third round of quantitative easing. The broader HDAX Index rose 0.3 percent today.

“At the end of the year, we could say happily ever after,” Robert Halver, head of capital markets research at Baader Bank AG in Frankfurt, said in a telephone interview. “The economic situation in Germany is not that bad. The Ifo figures point to 2013 being a stable year. Equities are still the asset class to be invested in. There are two reasons to invest in equities: money supply policy and the economy.”

The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 102.4 from 101.4 in November. That’s the second straight increase after sentiment dropped to a 2 1/2 year low in October. Economists predicted a gain to 102, according to the median forecast of 43 economists in a Bloomberg News survey.

U.S. Housing

In the U.S, housing starts fell 3 percent in November to an 861,000 annual rate from a revised 888,000 annual pace in October, the Commerce Department reported today in Washington. The median estimate of 85 economists surveyed by Bloomberg called for a drop to 872,000. Building permits, a proxy for future construction, advanced to a four-year high.

HeidelbergCement, the world’s third-largest maker of the building material, gained 4.9 percent to 46.24 euros. A gauge of construction stocks rose the second most among the 19 industry groups in the Stoxx Europe 600 Index.

Deutsche Bank reiterated its positive stance on building stocks, including HeidelbergCement, citing increased investor confidence in a turnaround, cost savings and strong balance sheets.

SAP Gains

SAP, the largest maker of enterprise software, advanced 0.5 percent to 61.02 euros after Oracle reported profit excluding some items of 64 cents a shares and adjusted revenue of $9.11 billion. That beat the average analyst estimates for profit of 61 cents and sales of $9.02 billion, according to data compiled by Bloomberg.

ThyssenKrupp added 2.4 percent to 18.57 euros. Credit Suisse upgraded the stock to outperform, the equivalent of a buy rating, from neutral, saying the planned disposal of its Americas unit will remove a loss-making business and substantially change the steelmaker’s long-term outlook.

Management’s focus on engineering will bolster its business model, according to Credit Suisse.

Deutsche Bank, the country’s largest lender, advanced 1.4 percent to 33.70 euros. Commerzbank AG, the second-biggest, rose 0.5 percent to 1.51 euros.

Stada Arzneimittel

Stada Arzneimittel AG, the generic-drug maker that has spent more than 250 million euros ($331 million) on acquisitions this year, gained 5.4 percent to 23.98 euros, its highest price in two months, on a report it may be a target itself.

Claudio Albrecht, who has been working as chief executive officer of Actavis Group HF, an Icelandic competitor which has been taken over, is sounding out interest among institutional investors to sell their Stada stock, Platow Brief said today, citing bankers it didn’t identify.

Merck KGaA sank 2.1 percent to 99.43 euros as its experimental drug L-BLP25 missed the main goal of a trial in lung cancer patients, denting the company’s ambitions of turning the medicine into a $1 billion-a-year product.

The drug, formerly known as Stimuvax, failed to improve patient survival significantly in the late-stage trial of more than 1,500 patients known as Start, Darmstadt, Germany-based Merck said today in a statement.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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