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German Stocks Climb for 12th Day on Bernanke Comments

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May 22 (Bloomberg) -- German stocks climbed for a 12th day, the longest winning streak since 2005, as Federal Reserve Chairman Ben S. Bernanke said tightening monetary policy too soon would endanger the U.S. economic recovery.

Metro AG rallied the most in 4 1/2 years as Morgan Stanley recommended investors buy shares in Germany’s biggest retailer for the first time in nearly a decade. SMA Solar Technology AG led peers higher as people familiar with the matter said the European Union may penalize imports of rival Chinese solar products. Siemens AG helped drag the DAX Index higher as Europe’s largest engineering company rose to a six-week high.

The benchmark DAX advanced 0.7 percent to 8,530.89 at the close in Frankfurt, having previously dropped as much as 0.4 percent. The measure has increased 12 percent this year, reaching an all-time high, as central banks around the world maintained monetary stimulus. The broader HDAX Index also rallied 0.7 percent today.

“Fed Chairman Ben Bernanke did not disappoint this afternoon, coming out once again in support of the Fed’s loose monetary policy,” Craig Erlam, a market strategist at Alpari U.K. Ltd. in London, wrote in e-mailed comments. “The Fed’s $85 billion of asset purchases are here to stay, at least in the short term.”

The volume of shares changing hands in companies listed on the DAX was 5 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.

Recovery Risk

“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said today in testimony prepared for a hearing at the Joint Economic Committee of Congress in Washington. Monetary policy is providing “significant benefits,” he said.

Bernanke is leading the most aggressive economic stimulus in the Fed’s 100-year history in an effort to spur growth and reduce a U.S. unemployment rate that stands at 7.5 percent. While the labor market has shown “some improvement,” he said today, “high rates of unemployment and underemployment are extraordinarily costly.”

“We’re still benefiting from this central-bank ‘put’ environment, but that is going to end and it will end first in the U.S.,” William de Vijlder, chief investment officer at BNP Paribas Investment Partners, which oversees $653 billion, told Mark Barton on Bloomberg Television. “Every word of the Fed governors is being looked at with a looking glass. When they do start to contemplate reducing quantitative easing, market nervousness will inevitably go up.”

Metro Rallies

Metro surged 10 percent to 27.34 euros, the biggest jump since November 20008. Morgan Stanley raised its rating on the stock to overweight, similar to a buy recommendation, from equal weight. The retailer is expanding the company’s Cash & Carry wholesale unit to better serve the hotel and restaurant industry, analyst Edouard Aubin wrote in the note.

SMA Solar rallied 4.5 percent to 24.50 euros, its highest price in seven months. The EU may penalize photovoltaic panels from China when it decides on June 6 whether to impose import duties, according to people familiar with the situation.

Smaller solar-product makers Aleo Solar AG and Solarworld AG increased 6.2 percent to 2 euros and 9.3 percent to 82 euro cents, respectively.

Siemens was the biggest contributor to gains on the DAX, as the stock rose 1.3 percent to 82.29 euros, its highest price since April 4. The advance erased its losses for the year.

Software AG increased 1.7 percent to 26.76 euros. The company is better placed to deliver earnings growth in the second quarter to meet full-year targets than rival SAP AG, according to Commerzbank AG. The Darmstadt, Germany-based company has slipped 17 percent so far this year, while SAP has climbed 2.2 percent.

SAP, the biggest maker of business-management software, was unchanged today.

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

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