German stocks rose for the third time in four days, with the DAX Index extending a record, as U.S. politicians moved closer to a deal to end a fiscal impasse and German investor confidence unexpectedly increased.
Bayerische Motoren Werke AG advanced 2.9 percent after Sanford C. Bernstein & Co. raised its price estimate for the stock and Kepler Cheuvreux named it a top pick. Axel Springer AG, Europe’s biggest newspaper publisher, climbed 2.7 percent as Commerzbank AG upgraded its recommendation. Bauer AG added 1.9 percent after Goldman Sachs Group Inc. advised investors to buy shares in the foundation-construction company.
The DAX Index gained 0.9 percent to 8,804.44 at the close of trading in Frankfurt, its highest level since inception. The gauge has rallied 2.4 percent so far this month, extending its 2013 increase to 16 percent, amid optimism that U.S. Congress will end the fiscal impasse and Janet Yellen, nominated to head the Federal Reserve, won’t rush to withdraw stimulus. The broader HDAX Index also rose 0.9 percent today.
“Markets are anticipating a last-minute solution to the budget discussions in the U.S.,” Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in a note. “Within the next two days the fiscal cliff discussions have to be decided and markets look like they are expecting a happy ending.”
U.S. Senate leaders may reach a deal as early as today to fund the government through Jan. 15, 2014, and extend its borrowing authority until Feb. 7, according to a person familiar with the negotiations who spoke on condition of anonymity. Democrat Harry Reid, the Senate majority leader, said he made progress in talks with his Republican counterpart, Mitch McConnell, as the government shutdown entered its 15th day.
Any agreement would still have to be approved by both chambers of Congress, overcoming stalling maneuvers in the Senate and Republican resistance in the House of Representatives. Without legislative action, the government would exhaust its borrowing powers on Thursday. The Treasury would start missing debt payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
German investor confidence climbed for a third month this month, data showed. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations rose to 52.8 in October from 49.6 in September. That’s the highest since April 2010. Economists predicted no change, according to a Bloomberg News survey.
BMW advanced 2.9 percent to 82.95 euros after Bernstein increased its 12-month price estimate for the world’s largest maker of luxury cars to 100 euros from 90 euros. Separately, Kepler Cheuvreux named BMW as a top pick in the European automobile sector.
Continental AG, Europe’s second-biggest auto-parts supplier, climbed 1.6 percent to 135.50 euros. Kepler said both Continental and BMW are among companies least likely to miss earnings estimates in the third quarter.
Axel Springer gained 2.7 percent to 44.54 euros after Commerzbank upgraded the shares to add from hold. The company’s revenue mix has improved in favor of digital activities after the disposal of some print assets, Commerzbank said, raising its price forecast for the stock to 48 euros from 35 euros.
Bauer AG climbed 1.9 percent to 19.44 euros after Goldman Sachs upgraded the shares to buy from neutral, citing a recovery in construction projects and demand for related equipment.
Evotec AG gained 3.9 percent to 3.53 euros. The drug-research company obtained a milestone payment of 4 million euros from Boehringer Ingelheim GmbH after an oncology molecule moved into the pre-clinical stage as part of a development alliance between the two.
Balda AG slumped 11 percent to 4.58 euros after the plastic-parts maker’s supervisory board dismissed Chief Executive Officer Dominik Mueser. The board also ordered an investigation into the acquisition of U.S. businesses and other transactions, Balda said without giving details. Balda bought C. Brewer Co. and HK Plastics Engineering Inc. for a combined $50 million in December.