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German Stocks Advance for a Second Day as Bayer Climbs

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Feb. 28 (Bloomberg) -- German stocks climbed for a second day, paring the DAX Index’s first monthly decline since May, as European Central Bank President Mario Draghi said he won’t withdraw measures to stem the euro area’s debt crisis.

Bayer AG gained to a one-month high after the maker of drugs and chemicals forecast sales will increase 4 percent to 5 percent this year. RWE AG rose 1.9 percent as Morgan Stanley recommended buying the shares. Hochtief AG plunged the most in 15 months after saying new orders will probably decline in 2013.

The DAX advanced 0.9 percent to 7,741.7 at the close of trading as four stocks climbed for every one that dropped. The equity benchmark has still retreated 0.4 percent in February as inconclusive elections in Italy prompted concern the country will abandon its austerity program. The broader HDAX Index also added 0.9 percent today.

“I fully agree with Mr. Draghi; at this stage the European economy still needs support,” Patrick Legland, head of research at Societe Generale SA, said in a Bloomberg Television interview in London with Francine Lacqua. “We might have a few weeks with uncertainties, but these will certainly not be big game-changers for the next few quarters. Fortunately, there’s the ECB acting as a backstop, which gives confidence to investors.”

Draghi said at an event in Munich late yesterday that the ECB has no intention of withdrawing its measures to combat the debt crisis. The central bank has lowered its benchmark interest rate to 0.75 percent, made long-term loans available to financial institutions and set up a bond-buying program called Outright Monetary Transactions.

Economic Growth

German unemployment unexpectedly fell this month, figures from the Nuremberg-based Federal Labor Agency showed today. The number of people out of work dropped 3,000 to 2.92 million on a seasonally adjusted basis, while the median estimate of economists surveyed by Bloomberg had predicted no change.

The U.S. economy grew at a revised 0.1 percent annualized pace in the final three months of 2012, figures from the Commerce Department showed. A previous report estimated that gross domestic product contracted in the quarter. Economists had projected growth of 0.5 percent in the period.

Another U.S. report showed initial claims for jobless benefits dropped by 22,000 last week to 344,000. Economists in a Bloomberg survey had called for 360,000 applications.

The volume of shares changing hands in companies listed on the DAX was 8.3 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

Bayer Advances

Bayer increased 2.7 percent to 75.86 euros, its highest price since Jan. 25. The company that invented aspirin said sales will rise to about 41 billion euros ($54 billion) this year as it starts selling new drugs and the crop-chemicals division continues to outpace the market.

RWE advanced 51.5 cents to 28.14 euros. Morgan Stanley raised its recommendation on Germany’s second-biggest utility to overweight, similar to a buy rating, from equal weight. Analysts led by Bobby Chada cited the company’s cost cutting, possible further asset disposals and commitment to reducing capital expenditure.

Aixtron SE, the maker of equipment for the semiconductor industry, rallied 9.9 percent to 10.21 euros, its biggest gain since March 2012. Revenue rose to 77.5 million euros in the fourth quarter from 62.2 million euros in the third quarter, the company said today. That compared with the 70 million-euro median estimate in a Bloomberg survey.

Hochtief slumped 7.2 percent to 51.54 euros, the biggest drop since Nov. 2011. Germany’s largest builder said it may sell more businesses to repay debt, invest in its infrastructure division and enter new industries. The company already plans to sell its airports unit.

Adva Optical Networking SE tumbled 4.3 percent to 4.29 euros, retreating the most since October. The maker of fiber networks predicted sales will decline to as little as 72 million euros in the first quarter, compared with 81.7 million euros in the year-earlier period.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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