German stocks climbed, sending the benchmark DAX Index to a three-week high, after Federal Reserve Chairman Ben S. Bernanke said the world’s largest economy will continue to need stimulus.
ThyssenKrupp AG and HeidelbergCement AG paced gains in European steelmakers and construction companies, both rising more than 2.5 percent. Lanxess AG climbed with chemical makers as UBS AG recommended the shares. Praktiker AG plunged 65 percent after the retailer said it will file for insolvency today for parts of the group.
The DAX Index rallied 1.1 percent to 8,158.8 at the close in Frankfurt, rising a fourth day, for its longest stretch of gains in seven weeks. The gauge has still fallen 4.4 percent since May 22, when the Fed first signaled that it may taper its bond-buying program if the U.S. economy strengthens. The broader HDAX Index also gained 1.1 percent today.
Bernanke “has sparked a sharp rally across stocks and bonds,” said Ishaq Siddiqi, a market strategist at ETX Capital in London. His “comments were unexpected.”
Bernanke said yesterday that the Fed may keep interest rates low even after unemployment falls to 6.5 percent. The Fed’s mix of instruments to support the economy may change and that should not be confused with a shift in policy, he said.
“Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” Bernanke said in response to a question after a speech in Cambridge, Massachusetts.
The Fed earlier released minutes of the June 18-19 gathering that showed about half of the 19 participants in the Federal Open Market Committee wanted to halt the $85 billion in monthly bond purchases by year end.
Salzgitter AG, Germany’s second-largest steelmaker, added 3.6 percent to 26.75 euros as mining companies and steelmakers advanced in Europe. Larger rival ThyssenKrupp rallied 2.7 percent to 15.29 euros.
Handelsblatt reported today that the RAG Foundation may buy some of ThyssenKrupp’s shares to diversify its funds. The newspaper cited comments made by Werner Mueller, RAG’s chief executive officer. A spokeswoman for the foundation said its articles of association allow it invest in ThyssenKrupp.
HeidelbergCement, the world’s third-largest cement maker, gained 3.2 percent to 51.78 euros as a gauge of European construction & material companies rallied 1.2 percent.
Lanxess rallied 3.7 percent to 46.59 euros, for the biggest advance on the DAX. UBS reiterated its buy recommendation on the German chemical maker with a price estimate of 62 euros, saying demand for butadiene will rise to its long-term pattern in 2015 and the current pace of capacity addition won’t be able to meet that growth.
Hugo Boss AG increased 1.6 percent to 87.25 euros after Societe Generale SA rated the luxury-clothing maker as a buy in new coverage.
Praktiker plunged 65 percent to 13 euro cents, its lowest price since its initial public offering in 2005. The home-improvement retailer said it will file for insolvency after a plan to sell a division collapsed.
The company failed to sell a stake in Luxembourg-based unit Batiself SA because the buyer’s board didn’t approve the deal, Praktiker said. The retailer said it had included the proceeds from a sale in its financing plan from last year.