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German Stocks Advance; HeidelbergCement, Munich Re Lead

Feb. 5 (Bloomberg) -- German stocks advanced, after the DAX Index fell the most in more than six months, as a report showed non-manufacturing business activity in the U.S. grew more than expected in January.

HeidelbergCement AG gained 1.8 percent as HSBC Holdings Plc added the cement maker to its Europe Super Ten portfolio. Munich Re climbed the most since July after saying it will increase its dividend and reporting full-year net income that beat estimates. Deutsche Telekom AG declined as a gauge of telecom stocks fell in the Stoxx Europe 600 Index.

The DAX added 0.4 percent to 7,664.66 at the close of trading in Frankfurt. The measure retreated the most since July yesterday amid corruption allegations against Spanish Premier Mariano Rajoy and uncertainty ahead of Italian elections this month. Spain’s 10-year government bond yields climbed to an eight-week high today. The broader HDAX Index also gained 0.4 percent today.

“The selloff that started yesterday has halted for the time being,” Guillermo Hernandez, head of trading at Fpm Frankfurt Performance Mgmt AG, who helps manage about 500 million euros ($665.7 million), wrote in an e-mail. “The pressure on Italian and Spanish bonds started an expected correction. The DAX is defending support lines.”

The volume of shares changing hands on the DAX was 36 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

U.S. Services

The Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers about 90 percent of the economy, fell to 55.2 in January from the prior month’s 55.7, the Tempe, Arizona-based group said today.

The median forecast of 76 economists surveyed by Bloomberg projected 55. Readings above 50 signal expansion.

HeidelbergCement increased 82 cents to 46.61 euros. The world’s third-largest cement maker replaced Alstom SA in HSBC’s Europe Super Ten portfolio.

Munich Re added 3.9 percent to 138.95 euros, its biggest gain since July 26. The biggest reinsurer said it plans to increase its dividend for last year by about 12 percent after fourth-quarter profit exceeded analysts’ forecasts.

Net income after minority interests fell to about 480 million euros from 627 million euros a year earlier, the company said in a statement today, citing preliminary figures. That was more than the 448.3 million-euro average estimate of 10 analysts surveyed by Bloomberg. The reinsurer proposed raising the dividend for 2012 to 7 euros a share from 6.25 euros.

Allianz SE, Europe’s largest insurer, advanced 1.7 percent to 103.80 euros, its biggest gain in a month.

Deutsche Telekom, Europe’s second-largest telecommunications company, slipped 0.6 percent to 8.79 euros, paring earlier losses of as much as 2.3 percent.

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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