German stocks advanced, with the benchmark DAX Index heading for its biggest monthly gain since February 2012, as a report showing euro-area economic confidence increased in May outweighed worse-than-forecast U.S data.
Infineon Technologies AG added 3.3 percent as JPMorgan Chase & Co. said semiconductor stocks will benefit from a decline in inventories. Allianz SE rose 2.8 percent as Nomura Holdings Inc. recommended the shares. Linde AG slipped after Citigroup Inc. cut its rating on the industrial-gases company.
The DAX climbed 0.8 percent to 8,400.2 at the close of trading in Frankfurt. The index is heading for a 6.2 percent gain in May and has risen in all but one of the last 12 months as central banks around the world maintained their stimulus efforts. The broader HDAX Index added 0.7 percent today.
“We are in a bull market for equities and this will continue,” Geoffroy Goenen, who helps oversee $1.3 billion at Dexia Asset Management in Brussels, said in a phone interview. “In both the U.S. and Europe you have very low levels of volatility and while we might see some volatility going up for short periods, we don’t expect that to be a structural move.”
The German VDAX Volatility Index, which measures the cost of buying protection on the DAX, on May 23 rose the most in seven weeks after Federal Reserve President Ben S. Bernanke said the central bank may taper the amount of purchases it is buying to stimulate economic expansion should growth rebound. The risk gauge in January fell to a record low of 12.29.
Some businesses in Germany closed today for the Corpus Christi holiday.
Economic confidence in the euro area increased in May, adding to signs the region is beginning to emerge from the longest recession in the single-currency era.
An index of executive and consumer sentiment rose to 89.4 from 88.6 in April, the European Commission in Brussels said today. That’s in line with the median estimate in a Bloomberg News survey of 33 economists.
The U.S. economy expanded less than previously estimated in the first quarter. Gross domestic product rose at a 2.4 percent annualized rate, the Commerce Department said today in Washington. The median forecast in a Bloomberg survey called for no revision from the 2.5 percent pace initially reported.
Fewer Americans than forecast signed contracts in April to buy previously owned homes, according to a separate report. The index of pending home sales rose 0.3 percent after a 1.5 percent gain in March, figures from the National Association of Realtors showed today in Washington. Economists forecast April contract signings would match the prior month’s increase.
Infineon, Europe’s second-biggest chipmaker, advanced 3.3 percent to 6.61 euros. A decline in semiconductor inventories will lead to increased orders as long as the economic situation doesn’t significantly worsen, according to JPMorgan. The bank named Infineon as a “key pick” in the industry because of its exposure to the inventory correction.
Allianz, Europe’s largest insurer, rose 2.8 percent to 121.80 euros. Michael Klien, an analyst at Nomura Holdings Inc., raised his recommendation on the shares to buy from neutral, citing the company’s profit outlook.
“We see positive earnings momentum for the next couple of years, driven by all business segments,” Klien wrote in a report. “We believe Allianz will increase its dividends steadily in the coming years.”
Deutsche Lufthansa AG, Europe’s second-biggest airline, climbed 4.4 percent to 16.84 euros. Global passenger traffic rose 3.2 percent in April from a year earlier, the International Air Transport Association said.
Linde dropped 0.4 percent to 149.05 euros, paring earlier losses of as much as 1.5 percent. Citigroup cut its recommendation to neutral from buy after the stock jumped 15 percent this year. The bank’s analysts wrote that the shares may still rise to 160 euros apiece.