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German Stocks Gain after Increase in Manufacturing PMI

Aug. 22 (Bloomberg) -- German stocks advanced, rebounding after three days of losses, as data showed better-than-expected manufacturing growth in Europe’s biggest economy and China.

Drillisch AG, a provider of telephone services, surged 8.3 percent after Berenberg Bank upgraded the shares. Stroeer Media AG, an online advertising company, jumped 5.8 percent after reporting an increase in first-half operating earnings before interest, taxes, depreciation and amortization.

The DAX Index climbed 1.4 percent to 8,397.89 at the close of trading in Frankfurt. The gauge has rallied 9.2 percent from its low on June 24 as the European Central Bank said that interest rates will remain low for an extended period. The broader HDAX Index added 1.3 percent today.

“The better than expected manufacturing data can be seen as further confirmation that the euro zone has left recession and is gradually recovering,” Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which oversees about $22 billion, said in a telephone interview. “Banks are also driving the improvement in the market, which may be also a confirmation of confidence in the recovery.”

The volume of shares changing hands in DAX-listed companies was 12 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

A measure of German manufacturing compiled by Markit Economics climbed to 52 in August from 50.7 in July. The median economist estimate had called for a reading of 51.1, according to a Bloomberg survey. A gauge of services advanced to 52.4, beating the median estimate of 51.7. A reading above 50 indicates expansion.

Euro-Area Manufacturing

Separately, Markit’s euro-area manufacturing index indicated growth for a second month in August, rising to 51.3 from 50.3 a month earlier. A composite index covering services and factory output also showed expansion for a second month, rising to 51.7 from 50.5.

A gauge of Chinese manufacturing rose in August from an 11-month low. The preliminary reading of 50.1 for a PMI Index released today by HSBC Holdings Plc and Markit compares with a final figure of 47.7 in July. The number beat all 16 estimates in a Bloomberg News survey and was the first reading since April above the 50 mark that divides contraction from expansion.

In the U.S., the Federal Open Market Committee’s minutes from the July 30-31 gathering released yesterday showed officials were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year if the economy continues to improve, with several members saying tapering might be needed soon.

U.S. Jobless

The fewest workers in more than five years applied for U.S. unemployment benefits over the past month, a Labor Department report showed today in Washington. The number of claims in the month ended Aug. 17 declined to 330,500 a week on average, the least since November 2007. Compared with a week earlier, claims rose by 13,000 to 336,000, in line with the median forecast of 48 economists surveyed by Bloomberg.

“Today’s data supports the bullish sentiment in stocks, the risk-taking approach that has been supported by policy is now being supported by stronger fundamental readings,” Daniel Weston, a portfolio manager at Aimed Capital GmbH in Munich, wrote in an e-mail.

Drillisch surged 8.3 percent to 15.41 euros as Berenberg Bank upgraded the stock to buy from hold and increased its forecast price on the shares by 43 percent to 20 euros. Drillisch’s guidance is conservative and Ebitda could beat the top end of its 2014 target by 11 percent, Berenberg said.

Stroeer Media jumped 5.8 percent to 10.20 euros after reporting first-half operating Ebitda of 47.4 million euros, compared with 40.8 million euros a year earlier.

Banks Advance

Deutsche Bank AG and Commerzbank AG, Germany’s biggest lenders, rose 2 percent to 33.54 euros and 5.7 percent to 8.60 euros, respectively. A gauge of banking stocks increased the most of the 19 industry groups on the Stoxx Europe 600 Index.

Continental AG, Europe’s second-largest supplier of auto parts, climbed 1.6 percent to 120.45 euros, its highest price in at least 21 years. Volkswagen AG, Europe’s biggest carmaker, added 1.2 percent to 183.35 euros. Bayerische Motoren Werke AG, the largest manufacturer of luxury cars, rose 2 percent to 75.18 euros. Daimler AG gained 1.7 percent to 55.64 euros. An index of auto stocks posted the second-best performance on the Stoxx 600.

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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